TOKYO – Mitsubishi Motors Corp. executives are having pay cut almost in half after the company slashed its full-year earnings outlook on tumbling sales triggered by the COVID-19 pandemic.
The Japanese carmaker said Friday it will cut base compensation to representative executive officers, executive officers and corporate officers by 20 to 30 percent in the fiscal year started April 1 and eliminate performance-based pay for the 12 months.
Several other automakers have announced similar cuts in executive compensation in recent weeks.
“Recognizing the severity of the situation, in which even a year-end dividend has to be canceled, we will reduce the compensation of our officers and directors,” CEO Takao Kato said. “As a result of this, the officers will see their compensation cut by up to 45 percent.”
Nonexecutive directors, including outside directors, will return 10 to 25 percent of their compensation. The carmaker also said it will eliminate its planned year-end dividend.
The austerity measures came as Mitsubishi cut its full-year operating profit forecast to 12.0 billion yen ($111.3 million) in the fiscal year ended March 31, from an earlier target of 30.0 billion yen ($278.3 million). The new goal represents an 89 percent plunge from the previous year.
Mitsubishi also warned that the company will slump to a net loss of 26.0 billion yen ($241.2 million) in the just-ended fiscal year, instead of posting a razor-thin net income of 5.0 billion ($46.4 million) as earlier predicted. It cut its fiscal-year revenue guidance by 7.3 percent.
The carmaker is expected to announce full fiscal-year earnings results sometime next month.
Mitsubishi blamed the revision on a sudden decline in sales volume because of falling global demand and the impact of the pandemic, which has forced worldwide production shutdowns.
“The spread of COVID-19 was the direct cause of our second downward revision to forecasts, and there is still no sign of an end to the situation,” Kato said. “In a business environment that is so utterly opaque, it is difficult to even offer appropriate forecasts of results. Under the circumstances, I believe it important for the time being to place an emphasis on establishing financial stability and preparing for all conceivable downside risks.”