VMware COO On Salary Freezes, Pay Cuts: ‘This Too Shall Pass’

‘We want VMware to be the best place to work in. So while we had to announce those COVID-19 measures, they’re not forever,’ says Sanjay Poonen, chief operating officer at VMware.


VMware’s Sanjay Poonen said the company’s decision to freeze employee salaries and cut executive pay due to economic uncertainties created by the coronavirus pandemic was a “prudent” decision taken that won’t last forever.

“We want VMware to be the best place to work in. So while we had to announce those COVID-19 measures, they’re not forever,” said Poonen, chief operating officer at VMware in an interview with CRN. “We’ll examine them quarter-by-quarter, but we’re doing even more to invest in our employees.”

Poonen, who himself took a temporary pay cut alongside the likes of CEO Pat Gelsinger, said VMware executives were more than willing to take a financial blow via a pay reduction instead of having to inflict a pay cut on the firm’s roughly 30,000 employees.

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“If anyone tells you that they can predict the future in this environment, they are either ignorant or lying. We’ve just been prudent. We value employees,” said Poonen. “We’ve been cautious about hiring people and we also felt it was better for the executives to take a pay cut. We are blessed. … For many of us executives, we will be fine, but we wanted to make sure that our employees didn’t have to take that same pay cut.”

[Related: Michael Dell On The Impact Of Coronavirus, VMware Integration And Networking Share Gains]

Last week, the Palo Alto, Calif.-based virtualization market leader confirmed it was conducting a company-wide employee salary freeze as well as temporary salary reductions for top executives and VMware board members during its fiscal second quarter and third quarter. Additionally, VMware is halting 401K matches and switching from a semi-annual to annual bonus plan for its employees.

Poonen, who is responsible for worldwide sales, services, support and alliances, said VMware will be constantly reviewing its decision on a quarterly basis.

“This is a time where we are all in this together. We have deep empathy. There is no time for anything other than helping sympathetically and empathetically with all our employees,” he said. “Beyond this, we are doing a lot to invest in the health and well-being of our employees. At many companies there are COVID-19 cases. We’ve been fortunate to not lose anybody. I know some other companies and partners who unfortunately lost employees. We want to take care of our employees, both their physical and mental health.”

Poonen said VMware is constantly conducting internal calls with staff and is providing training to help employees handle the coronavirus pandemic. “When you go through a crisis, the best thing you can do is train yourself to be ready for the next phase of life – and that all involves online. So there are free ways in which they’re getting education within the company.” he said.

The COO and his team are spending time with employees in every country and conducting live Q&A meetings.

“It really connects you with the heart and soul of our 30,000 employees. A little over half of that employee base works in my organization. So I want to make sure I’m connected to them,” he said. “This too shall pass. I hope we come through the tunnel a stronger company.”

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. 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 April, Dell Technologies founder and CEO Michael Dell decided to forgo his roughly $1 million base salary due to the “disruption” caused by the coronavirus pandemic.