Putting HP’s job cuts in perspective …
When Hewlett Packard (HPQ) announced its $1 billion reorganization plan on Tuesday — including plans to lay off as many as 9,000 people, and hire some 6,000 others over three years — we wanted to take a look at a few of the company’s filings to get some perspective.
The 8-K that contained HP’s announcement was lacking much in the way of detail. So were subsequent conference calls, to judge from the press coverage. And over at CNBC, Herb Greenberg questioned the way HP plans to include the impact of the changes in its non-standard financial reports — or, rather, the way it plans not to do so. But other disclosures provide another kind of context for the company’s announcement.
For example, compensation for the company’s top five executives over the last three years has totaled some $251 million under the calculations in its Jan. 27 proxy filing — or roughly a quarter of what it plans to spend on the reorganization. (That includes $97.8 million for Chairman and CEO Mark Hurd.) On average, their compensation has totaled $83 million a year , or as much as 17% of the $500 million to $700 million in annual net savings that HP expects to reap from the changes.
Granted, HP likely couldn’t cut those costs to zero — someone needs to run the company, after all, and presumably they won’t work for free (though they might find a way to do without Hurd’s $175,776 in personal flights on the corporate airplane). Moreover, even if the board wanted to, it might think twice before jettisoning current management: Doing so could cost as much as $122.9 million in severance and other termination costs. Hurd alone would get $52.9 million, according to the proxy.
HP has starred on these pages often enough — including for a couple of mistaken perks and a curiously late 2007 filing — and has enough of a penchant for acquisitions and reorganizations, that we hope you’ll pardon us for being a little skeptical. As more details emerge, we’ll see what severance looks like for the workers HP lets go, as well as how much of the projected savings actually materialize — and how much winds up expanding those executive-pay numbers further still.
Image source: Wikimedia Commons
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Posted in Tags: 8Ks, CEO |
 1 Comment » |
June 3rd, 2010 at 10:56 am
H-P doing some hiring too that offset some of their typical post merger cuts. NYT:
SAN FRANCISCO — Hewlett-Packard announced Tuesday that it would cut 9,000 jobs and take a charge of about $1 billion over several years, as it consolidates and automates data centers.
During the same time period, H.P. will hire 6,000 new workers in sales and service delivery positions, said Jane McMillian, an H.P. spokeswoman.
Under Mark V. Hurd, H.P.’s chief executive, the company has shaved costs by regularly cutting large numbers of staff. In 2005, Mr. Hurd cut 15,300 jobs, in part by consolidating the data centers running the company’s own operations.
In 2008, after H.P. acquired Electronic Data Systems, it cut 7.5 percent of the company, or 25,000 people, and reduced the salaries of others by 20 percent in some cases. In May 2009, H.P. announced that it would cut 6,420 people.