Satyam's Mynampati may have to take huge salary cut

Ram Mynampati, former interim CEO of tainted Satyam Computer Services, and his other senior colleagues may have to take a huge cut in their salaries. The Satyam board, functioning on a shoestring budget, is vetting a proposal to slash target variable pay.

It has decided to lay off its top-level employees to trim costs. Other associates of the firm with 53,000 employees will see a pay cut. This would include those working overseas.

Ram Mynampati is a senior employee of the company and about a half of his remuneration package is target variable pay. As the company is planning to slash target variable pay of employees to cut cost, he will have to reckon with a much lower remuneration compared to Rs 3.5 crore he earned last fiscal, said a source. Going by remuneration he earns he is considered to be the most valuable asset of the company.

In fiscal year ended March 2008, his total package, including perks, worked out to Rs 3.5 crore. Mynampati, also a whole-time director of the erstwhile Satyam board, in fact earned more than the disgraced founder of the company B Ramalinga Raju.

Mynampati is the president of commercial and healthcare business of the company. His salary was proportionate to the business his division brings in. With Satyam faced with a financial crisis, he also will have to compromise on remuneration, the source said.

Last fiscal, Ramalinga Raju earned Rs 60.4 lakh, while his brother Rama Raju’s package was Rs 44.07 lakh. The remuneration package for the Satyam employees comprises of a variable and a fixed component. The variable component is around 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.

Clearly, variable pay is the lever the company has to trim. There will be job losses at the I band (senior rung employees and executives). Employees in the other levels will face a uniform pay cut as a part of the cost rationalisation, said Hari T, global marketing and communications head, Satyam.

The company will also relocate its onsite employees in UK and Europe to low-cost countries to cut down on its operational expenses. This will include employees who provide pre-sales and post-sales services onsite. In addition, the company is also looking at slicing its marketing expanses as a part of its cost rationalisation programme.
However, the company will retain key associates working on site, including those who directly interact with the clients, Hari said.

Two of the companys senior officials-Subu D Subramanian, global head of manufacturing and automotives division and Anil Kumar, a senior vice-president-quit earlier last week.