Satyam staff faces cut in variable pay

Source: The Economic Times
Employees at the troubled Satyam Computer Services who may have heaved a collective sigh of relief with the anticipated receivables position of Rs 1,700 crore, could be in for a cut in their variable pay packages. Till last week, there were huge uncertainties regarding payment of their salaries itself.

Satyam needs Rs 800 crore in January for payment of wages and debt obligations while the requirement is Rs 600 crore each for February and March. The company said it had paid $20 million towards January salaries (paid every fortnight) to its US employees. In all, the company needs up to Rs 1,500 crore till March to service wage bill and debt.

When asked about a possible dip in variable payouts, a Satyam spokesperson declined to comment.

The remuneration package for the 53,000 employees comprises of a variable and a fixed component. The variable component is 10% at the entry level, 20% at the middle level and 30% at the senior management level. Half of the variable pay is a guaranteed payment. The other half is linked to three parameters including the performance of the company, the individual and the business unit.

The proposal to cut variable pay was, in fact, on the cards even at the end of the second quarter when the company scaled down its hiring projections given the weakening demand for software services. The company had earlier talked about trimming its costs by re-assessing the variable payouts.

In fact, Satyam Computer had said it would review the guaranteed component of the variable pay given to its employees . Any cut could mean a lower take home pay for the employee. Currently, the company’s wage bill accounts for over 60% of its revenue.