Sick of watching CEOs cashing out while their company -- and employees -- suffer? So is Nintendo. After slashing the price of the Nintendo 3DS, the company is cutting executive salaries just as ferociously.
Nintendo CEO Satoru Iwata
Global president and CEO Satoru Iwata announced Friday at a meeting with shareholders that he would be taking a 50 percent cut to his fixed salary as a show of responsibility for the dismal quarterly earnings and failure of the 3DS to catch on. In addition, members of the board of directors are taking a 30 percent pay cut, while other executives will see their paychecks cut by 20 percent.
Nintendo's stock fell to a six-year low yesterday following the announcement that it would cut the price of the 3DS handheld system from $250 to $170 just four months after introducing it to the market. In its first fiscal quarter, Nintendo saw its revenues drop by more than 50 percent compared to a year ago. It also reported a $328 million dollar loss.
Iwata -- and all of Nintendo's executives -- are far from the highest paid in the industry. Last year, Iwata received $1.8 million in compensation, a pittance compared to Activision-Blizzard CEO Bobby Kotick, who received $5.6 million in salary, stock options and bonuses last year (and currently holds $82 million in unexercised options, according to Forbes).
It's a startling move for American consumers, who are used to seeing greed and finger pointing from Wall Street CEOs who continue to award themselves massive bonuses even as their companies collapse. Japanese executives, though, work under a different philosophy, taking direct responsibility for shortfalls.
In the meeting, Iwata effectively fell on his sword for the 3DS's lagging performance, saying he felt a "very great responsibility" for the situation.
The price cut puts Nintendo in new territory, in that the 3DS hardware will actually lose money with each sale. That's fairly common for most consoles, but Nintendo has always sold its systems at a profit.
Iwata acknowledged the loss in today's briefing, but said increased demand would lead to cuts in production costs, which would make the hardware profitable again soon. Iwata also repeatedly stressed the importance of building up the library of 3DS games.
Nintendo will have plenty of its own games out this year, but convincing third-party publishers to help may be difficult. Capcom, Ubisoft and THQ have all canceled games for the system already, yanking such valuable franchises as Assassin's Creed and Saint's Row.
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