On March 13, 2009 HP announced a 10% pay cut. Employees making less than $40,000 per year are exempt. This is in addition to pay cuts that have already been made previously ranging between 2.5% and 20% for the CEO. The following is the email that was sent out to the employees with the announcement:

From: EDS Worldwide Marketing – Communications
Sent: Friday, March 13, 2009 4:05 PM
Subject: Additional, Temporary Compensation Adjustments for EDS U.S. & Puerto Rico Employees

To EDS Business Unit Employees in the United States and Puerto Rico:

Since becoming part of HP last year, we have accomplished a great deal and should be proud of what we have delivered together. Our service excellence remains high, and we have closed a number of significant deals. Our execution during the transition phase has been outstanding. As we move from the integration phase into the transformation phase, we know from experience with our own client projects this will be the most difficult part of our journey.

Our goal is to transform the business into a future state, which will grow faster than the market and enable us to take share from our competitors. We will then be able to deliver above-industry benchmark returns to our shareholders and price deals that win more business while providing flexibility to invest in innovation, delivering greater value to our clients.

The gap between where we are today and accomplishing our goals is widened by the current economic climate. As a result, we need to take temporary actions to get us through this difficult period. Our customers expect EDS to be a financially strong partner and, as employees, we expect a healthy company as well. With this in mind, we announced specific actions on March 9 to reduce our cost structure and enable the business to improve operating profit and grow as we enter fiscal year 2010.

Unfortunately, we need to take additional action. Specifically, we have decided to make a temporary, additional reduction in base salary affecting EDS business unit employees in the United States and Puerto Rico.

Base salaries for all United States and Puerto Rico employees in the EDS business unit will be temporarily reduced beyond those reductions previously announced by HP on February 18, as follows:

An additional, temporary reduction of 10 percent in base salary effective for April 2009
Base salary will not be reduced for employees below an annualized, full-time equivalent income of $40,000 by this additional, temporary action
In May 2009, base salary for United States and Puerto Rico employees in the EDS business unit will be reinstated to the levels of base salary effective on March 16. This includes reductions previously outlined in HP’s February 18 announcement. While we have no plans for an additional base salary reduction, we will continue to closely monitor the performance of our business and make further adjustments as required in the coming months.

We recognize these are tough actions, and you can be assured we made this decision after much thought and assessment. We ask for your support and understanding as we work through these very difficult times. We are confident we will strengthen our position in a consolidating market. We will be one of the industry’s strongest and safest pairs of hands, trusted by our clients to solve their technology challenges.

Sincerely,

The EDS Senior Leadership Team

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