HP Slashes Jobs, Pays CIO $15.3 Million

A source close to Hewelett-Packard indicated over the weekend that the company plans to cut at least 15,000 jobs from its workforce, with the biggest cuts coming to the IT, sales and service divisions. The news comes as HP said in a filing that it planned to offer new CIO Randall Mott a $15.3 million pay package.

Sources said that the job cuts would save the company an estimated $1 billion per year and were being done to improve cost efficiency compared with HP's competitors. The official word on the layoffs could come as early as this week; company representatives said they would not comment on the speculation.

Meanwhile, a filing with the Securities and Exchange Commission indicated that HP's new CIO Mott would be awarded a base salary of $690,000, including bonuses of 100 percent of Mott's salary in both 2005 and 2006, as well as an option for 500,000 shares of common stock in the company.

The filing also indicated that Mott will receive a $2.2 million signing bonus, 285,000 shares of restricted stock valued at some $7.11 million, performance cash of $7 million from 2005-2008, and a $1 million allowance to relocate.

The job cuts at HP have been massive in recent years. Carly Fiorina laid off nearly 15,000 in 2002 and 2003 after HP's merger with Compaq, and 4,500 employees have been laid off this year alone.

Even if profits are boosted, however, some analysts say these continued large layoffs run the risk of damaging the morale of the company's workforce.

The job cuts at HP would constitute approximately 10 percent of the active workforce as of the latest survey by financial research firm Sanford C. Bernstein & Co.