HP to Cut Salaries of All Employees, Executives

Palo Alto, Calif. - Attempting to avoid massive layoffs in the face of the ongoing recession, Hewlett-Packard (HP) (NYSE: HPQ) has announced pay cuts for all of its employees.

CEO Mark Hurd will take a 20% cut, members of the executive council 15%, other executives 10% and all other employees 5%.

The company, which late Wednesday announced a 13% drop in quarterly earnings, also plans to implement changes in its 401(K) and share ownership plans.

"At a company-wide level, I don't believe a major workforce reduction is the best thing for HP at this time," Hurd wrote, in a memo to employees obtained by AllThingsD.

"But we do have to do something...because the numbers just don't add up and we need to have the flexibility to make the right long-term investments for HP."

Hurd said that if the company performs better than expected, the reductions potentially could be made up in bonuses.