VMware Confirms Employee Salary Freeze, CEO Pay Cut

‘We can confirm that there have been a number of cost management changes impacting the VMware workforce,’ says VMware in a statement to CRN.

VMware has confirmed to CRN that it has implemented a “number of cost management changes” after an internal memo surfaced stating that the company is conducting a company-wide employee salary freeze as well as temporary salary reductions for top executives, including CEO Pat Gelsinger, due to the uncertainty of the coronavirus pandemic.

“We can confirm that there have been a number of cost management changes impacting the VMware workforce,” said VMware in a statement to CRN. “This is a part of a thoughtful and prudent plan designed to address the current uncertainty of the COVID-19 pandemic and the overall economic outlook, while ensuring the company has the skills and talent needed to accelerate growth as the economy stabilizes.”

The Palo Alto, Calif.-based virtualization superstar is also halting 401K matches and switching from a semi-annual to an annual bonus plan for its approximately 31,000 employees, according to an internal memo sent to employees signed by VMware Chief Financial Officer Zane Rowe and Chief People Officer Betsy Sutter, first obtained by Business Insider.

[Related: Nutanix Confirms Furloughs Of Nearly 1,500 Employees]

In the memo, the two VMware executives said the “global economy is facing serious challenges” stemming from the coronavirus pandemic.

“Many of our customers are under financial pressure,” said the internal memo. “They remain cautious in their short and mid-term investment plans and that means VMware must also be thoughtful and prudent as we navigate the next several quarters.”

Gelsinger, several other top executives and VMware board members will take salary reductions during the company’s fiscal second quarter and third quarter. The memo did not say how much the salary reduction would be for the VMware executives and board members. VMware declined to provide financial information on the matter.

In March, both VMware and Dell Technologies, which owns a majority stake in VMware, pulled their fiscal year 2021 financial guidance because of the economic uncertainty stemming from the coronavirus pandemic.

“VMware is unable to predict the extent to which the global COVID-19 pandemic may adversely impact its business operations, financial performance and results of operations,” said VMware a March filing to the U.S. Securities and Exchange Commission.

Both Dell and VMware did not provide new full year guidance numbers. The two companies said they will provide more information during their upcoming quarterly earnings report later this month.

In regards to the salary freezes and executive pay cuts, VMware told CRN that the company’s “business remains strong” with continued interest and demand for products, solutions and services.

“The actions the company is taking now will strengthen VMware’s foundation and ensure the company is positioned to effectively navigate the challenging landscape ahead,” said VMware.