I’m not sure if any of you guys have been following the story of CEO Mark Hurd over at HP .. ?
To bring you up to speed, allow me to give you a 5 second capsule review. In May last year, Hewlett Packard bought Electronic Data Systems (EDS) for $13.9Bn. EDS provides, in their words, a broad portfolio of business and technology solutions, from e-commerce platforms to integrated out-sourcing contracts and business transformation.
What transpired as soon as HP took over was an immediate 20,000 headcount cull of EDS’s 120,000 global employees. Ok, recession, depression, all seems reasonable thus far, cut the wheat from the chaff, yadda yadda.
Anyhow, last month, Mr Hurd announced that all HP employees (including those remaining at profitable entity EDS) would be required (“asked” in the case of non-US employees) to take between a 5% and 20% pay cut depending on their level of seniority. To emphasise his commitment to the cause he announced that he too would be taking a 20% cut from his $1,450,000 salary – amounting to a reduction of some $290,000.
On the face value of it, regardless that he was still pulling in over $1m per annum in annual salary, so be it. I have the firm belief that if such things are necessary, and regardless that his income is immeasurable against the common or garden worker drone, you have to lead from the front when times get tough. Unpalatable decisions need to be backed and supported by all and none more so than from the guys at the top.
“The point is…?” - Goes the communal reply.
Ok, here’s the thing. Mark Hurd is reducing his basic salary by 20% in line with all the other HP employees. In the US these employees have no choice. It’s a mandatory reduction of between 5% and 20%.
The Company line, read PR, read smoke and mirrors show falls flat however when you look at the sums a little closer. And do please have your sick bags at the ready.
In 2008, Mr Hurd also received :
$5.3m in Bonus
$12.9m in Stock
$3.4m in Option Awards
$18.5m in Incentives
$738k in Other Compensation.
Together with his HP financed home security ($256k), HP financed personal use of the company jet ($135k) and his mortgage subsidy ($71k) his total compensation for 2008 amounts to an extremely modest $42,514,524. How will he manage to put food on his family’s table..?
Basically, he earned (and its worth repeating) about an office junior’s salary above 42.5 million dollars…
So, lets back up to his “oh so generous offer” to reduce his salary by 20%. In real terms, this $290,000 he will be losing amounts to just over 0.5% of his total pay. Perhaps even more vulgar, he starts with over $42 million and ends up with, you guessed it, just over $42 million
In 2008, four other senior executives at HP, who are also required to reduce their basic pay by this 20%, each earned more than $20m a piece. Of course, the highest any of them is losing amounts to just $160k.
Most of us work. Most of us work hard. Most of us earn enough to get by. And most of us would wince at the idea of permanently losing (for thats what HP staff are being asked to do) between 5% and 20% of our salary. Especially when the fat cat at the top is treating you like a moron.
The spin Mr Hurd and his cohorts place on this action include the velvet glove approach of intimating that it’s better to lose a slice of salary than any more staff. Pfft. Trouble with this line is that people have long memories and, of course, the internet.
Since Mr Hurd’s tenure at HP, they have already shed over 40,000 staff. When the salary slicing exercise is done and dusted and the recession bites that bit harder – despite HP continuing to turn a profit ($1.9Bn in the past 12 weeks) – based on previous behaviour, you can bet your bottom dollar that more head cuts will be on the way.
Most of Mr Hurd’s current actions have been seen before. In fact, his previous CEO role was at NCR Corp. The modus operandi here was, of course, to do exactly what hes now doing at HP. Way before the current HP smoke and mirrors show, Mr Hurd left a company where it was said “morale under him plummeted after management slashed jobs, demoted personnel and cut benefits.”
John Pardon, an NCR alumnus said of the company during Mr Hurd’s tenure that “the feeling is one of utter insensitivity and [as an employee] complete lack of respect or regard for them. Among my peers within the company, there’s a great deal of skepticism and suspicion about anything the company had to say”.
From a May 2008 issue of Business Week magazine ” Hurd’s strategy severely damaged the core of the corporation — the employee base. Here’s what Hewlett-Packard Co. employees can look forward to under Hurd: loss of pension benefits, less attractive and more expensive health care benefits, loss of educational benefits, massive layoffs, jobs lost to outsourcing, and demotions coupled with loss of pay”
When Hurd took over at HP, analysts advised that he should :
- Make cuts at HP that are financially sound without ripping the heart out of what’s left in that company. I just worry that he may choose or be cajoled into choosing to cut too deeply
- Given that Hurd is new to HP, he should make his plans as clear as possible to employees
- Before Mark Hurd got there, the place still has managed to attract and retain people who are not only talented and hard-working, but also loyal to their perception of the HP Way. If Hurd makes these cuts in too Draconian or insensitive a way, he risks snuffing out the last vestiges of the HP Way
I guess he wasn’t listening.
That’s corporate America and why many in the domaining community are trying to mark our own paths…
If this keeps up there will be a revolution and the heads will roll.
It doesn’t mean we will be in a better position when we are done though.
I think our corporate leaders and wall street have been too short-sighted for too long. If we go back to WHY did the rules change for lending on new home sales, we find that it is because buyers couldn’t afford as much house as they used to due to rate of inflation compared to salary range AND # of jobs moving overseas at an increasing rate. Most of these people were in the middle class – not poor, not rich. When the lending rules changed, it created a “false sense of security” in an environment where the middle class was already over-extended by keeping up consumption using credit (0 down, 0 payments for 1 year, etc., etc.). Once the payments are due on all of these great offers and the APR rates adjusted after their 3-5 year term, the middle class consumers “sink in quicksand”. Not only that, they are losing jobs at an alarming rate.
Consumer – buys goods and services – businesses grow and hire more employees – more consumers buy more goods and services – employees get raises – consumers buy more goods and services. THIS IS HOW IT WORKS.
US Companies have cut the legs off the consumers – less pay, less benefits, less jobs – and they wonder why they don’t make as much money now.
How about we get some smart people in CEO positions who understand basic rules of economics. Keep employees in the US – pay them a good salary – give them good benefits – and, GUESS WHAT, the economy will pick back up again!
US Government should have distributed the “TARP” money to the people who are US citizens, over 18 years of age, who own a home. This would have put the money in the hands that need it and in the hands that SPEND it, thus keeping the economy moving forward.
I think I will write a book about what’s really going on here and perhaps enough people will listen to do something about it.
Sounds like his name should be Mr. Turd, not Mr. Hurd.
Unfortunately, this is the kind of greed that capitalism fosters. You only find this kind of contempt for your fellow man and narcissistic gluttony in dictatorships and capitalistic countries. So, those Americans who have a big issue with this type of behavior yet balk, nay scream in fear, at the word socialism, are quite frankly somewhat hypocritical.
Great site! Love your eloquence and relevant articles. Steam on, girl!
Great post. Good work. Pamela, I wish there were a way to do something about it.
hey guys
get a look at the pre-eminent blog for defrocking guzzling corporate toads (and especially Turds!).
mkdenham you are so right – we are heading for a kind of judgement I think – of the outrageously greedy 0.1% who devour all they can wrest from decent people – see the opinions of the latter below:
http://www.damiansaunders.net/2009/02/26/commentary/hp-pay-cuts-an-unfair-act-of-economic-opportunism-and-greed/
EDS employees that make over $40K will also be taking a 10% pay cut (on top of the aforementioned pay cut) for the month of April. I’m thinking they shouldn’t have given Rittenemeyer so much cash to do nothing.
Well, I think it is ridiculous that EDSers were introduced to the HP culture just last year and this year, received 2 pay cuts (at least in the US/Puerto Rico). EDS made HP money and was the most successful division. Add to that Hurd’s ridiculous rationalization of his pay cut, as if we are supposed to commend him for that. I enjoyed working for EDS for the most part, but these last few weeks have been terrible, now that we are more acclimated to HP. And worse, I have been told that HP plans to do some salary parity for EDS people, since EDSers by and large make more than their HP counterparts. HP truly sucks, and I am not afraid to tell anyone this.
As a ex HP employee who left 12 months ago after 5 years working there, I can tell you that its hell inside there. The people left are dead inside, just the like the rest of the company. The people who are left will take this pay cut and smile and thank HP for keeping them in a job, why? Cause they are dead inside!!
I’m glad I’ve left HP, while I had a great time there for the first few years, the lack of payrises and the contentious job promotion with payrises was a joke! Its a great place to work up the ladder as the people above you can’t get out quick enough and HP can’t ‘hire’ quick enough to fill them, so you get job promotions. But then cause of freezes etc your not allow to have a payrise! So you end up being hired at a low level job, then run a multi million dollar account on desktop wages!
Talking about HP and its brand:
http://Marketing.Of-Cour.se/2009/04/17/why-is-hewlett-packard-brand-dead/
They certain.ly need a change, a big one.
Mr. Turd will need that security. He should be kill for what he has done. and his guts fed to the buzzards.
[...] is painfully obvious considering this breakdown of HP CEO Mark Hurd’s $1.45 million salary in 2008. While he took 20 percent off his $1.45 [...]
As a former multi-yr hp employee, trust me when i say, hp, mgmt, and especially exec mgmt like Hurd and Livermore don’t give 2 shits about you as an employee.
Hurd made 43M and Livermore made 27M last yr all while they were laying people off for no reason other than an expense adjustment. Don’t get me wrong, there are several folks below them that are f**ked in the head too like the whole mgmt team on HP’s biggest outsourcing acct, they don’t know whether they’re winding their ass or scratching their watch and some of them are very ethically challenged and think manipulating and deceiving employees is part of their job description.
If Hurd and Livermore actually cared at all, they could have done something pro-employee such as offered up half of their total 2008 compensation and use that 35M+ to retain several hundred/thousand people in their jobs. In other words, their pure and unbridled greed (and several others) and lining their pockets is all they care about and make no mistake whatsoever, the bottom line is the price of the stock. whatever they have to do to keep that up is what they will do.