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Some weeks ago, HP announced that most employees will have to reduce their base salaries by 5% due to the pessimistic outlook for 2009 although net revenue grew up 1% to $28.8 billion in the first quarter.



This is not to say there is no economic recession and that everything runs smooth but the way management is “asking” employees to cut their pays is somehow imperial to say the least. In fact, this decision has been made without any consultation with the EWC or any employees’ representatives. This pay reduction will then have to comply with local laws and collective agreements, which is not straightforward.



As for the amount of the pay reduction, it may well vary depending on the position. If it’s true that base salaries of council members will be reduced by 15% and the one of other executives will be reduced by 10%, the issue is to determine the importance of the flexible salary for every employee.



For example, the base salary of the CEO Mark Hurk will be downsized by 20%. But his base salary represented only 3.4% of his total compensation of $42.5 million in 2008. In other words, his overall salary will be reduced by 0.68% to be exact, which is far lower than the 5% that will be subtracted to the average HP employee.