Remember when Nissan's bosses got blasted at their last stockholder meeting for the bad financial results and for a director riding a Toyota Alphard?
Well, it seems Alliance member Mitsubishi Motors Corporation has taken the lessons to heart.
In a press release, Mitsubishi Motors Corporation (MMC) made some revisions to their financial forecast for the 2019 Fiscal Year, and the forecast isn't good. Initially, the company predicted a lower performance in FY2019-2020 compared to FY2018-2019 due to the global dip in demand before COVID-19 but dropped sharply even further due to COVID-19.
The new MMC forecast for FY2019-2020 represents a larger drop with net sales down by 9.7%, operating profit forecasted to drop by 89.2%, ordinary profit dropping to negative figures, and basic earnings per share dropping to -17.36 JPY. In FY2018-2019, each share earned investors 89.26 yen.
Those following the auto industry know that Japanese automakers tend to follow the Fiscal Year system wherein companies count their performance from April 1 to March 31 (i.e. FY2019-2020 is from April 1, 2019, to March 31, 2020) rather than a calendar year.
That means by now, MMC should have been able to release the final figures for FY2019-2020, but because COVID-19 has shut down offices for several key markets -the Philippines (with Mitsubishi Motors Philippines) being one of those key markets- MMC has not been able to get the full and final figures due to the unavailability of final audits.
In that regard, and in anticipation of the low numbers, MMC has decided to not pay a year-end dividend to stockholders. Mitsubishi Motors said in a statement that they need to urgently stabilize their financial base to restore profitability.
In light of that issue (and the undoubtedly huge backlash it would incur from shareholders), Mitsubishi Motors executives have decided to take a big pay cut.
Top MMC bosses (Representative Executive Officers, Executive Officers, Corporate Officers) will not be receiving any performance-based compensation (AKA: bonus), and they will all take a 20-30% reduction in base compensation. Non-Executive Directors including Outside Directors will take a pay cut of 10-25%.
The pay cut will be effective for the next Fiscal Year.
If you recall MMC's biggest stakeholder is Nissan, and during the last shareholders meeting, Nissan's bosses were grilled for being unable to pay dividends and were blasted for not taking a reduction in pay.