Management pay cuts at Seagate will nearly cover severance costs of fired employees
Seagate Technology, the disk drive manufacturer that last week said it was going to reduce its worldwide work force by about six percent, said severance costs for the approximately 2,950 employees affected by the layoffs would be about $90 million. The layoffs include a reduction of its U.S. work force of 10 percent, indicating that workers in this country are absorbing a majority of the cuts.
The company estimated that it will take a charge of about $90 million, mostly in its 2008 fourth quarter, that will consist mainly of employee termination costs.
Seagate also said it would be reducing the salaries of certain management employees beginning in February, with pay for its chief executive and other executive officers being reduced 25 percent, for its senior vice presidents by 20 percent, its vice presidents by 15 percent, and for its management, sales, supervisors and professional employees by 10 percent.
The salary cuts will save the company about $80 million, $10 million less that the cost of severance being paid out to the nearly 3,000 employees it is firing.
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Please stop using the word “fired” when people are being “laid off” due to lack of work. In Seagate’s situation, this is involuntary termination which is the employee’s departure at the hands of the employer. There are two basic types of involuntary termination, known often as being “fired” and “laid off.” To be fired, as opposed to being laid off, is generally thought of to be the employee’s fault, and therefore is considered in most cases to be dishonorable and a sign of failure. Often, it may hinder the now job-seeker’s chances of finding new employment, particularly if he/she has been fired from earlier jobs.