The new Honda Fit cost the maker's CEO $70,000.
Many executives have incentives tied to the performance of the company they work for, but in Honda’s case, senior executives are being docked some pay after the maker’s subcompact Fit was recalled for the fifth time.
The recall involves 425,825 Fit hybrid vehicles and other models in Japan. Honda said in addition to a noise-related issue there is a problem with the ignition coil or power-supply circuit could cause the engine to stop in the Fit and Vezel hybrids as well as some gasoline-powered Fit and N-WGN models.
The move comes as Honda is facing lawsuits due to accidents involving airbags supplied by Takata Corp. The airbags have been linked to four deaths, which were all in Honda vehicles.
More than 16 million vehicles equipped with the airbags produced by Takata are being recalled globally.
“We have inconvenienced many customers, and we’re deeply sorry,” said Honda spokesperson Akemi Ando during the announcement for the latest Fit recall.
Not only are customers being inconvenience, much of Honda’s senior leadership is going to be as well. Since the most recent recall involved a quality issue, Chief Executive Officer Takanobu Ito will take a 20% pay cut. According to the Wall Street Journal, that equates to about $70,000.
(After gloomy forecast, Ford beats expectations. For more, Click Here.)
He won’t be alone as Chairman Fumihiko Ike and Executive Vice President Tetsuo Iwamura will give up 10% of their pay. It is the first time Honda executives have had their pay cut for this reason.
(Click Here for additional details about the Takata recall.)
However, they are not the first Japanese executives to have it done to them. Mitsubishi Motors Corp. reduced management pay by 25% to 50% in 2004 after recalling more than 800,000 vehicles that year.
(To see more about Audi’s addition of 850,000 vehicles to airbag recall list, Click Here.)
Getting a little light in the wallet may be driving the point home as the company appointed Senior Managing Officer Koichi Fukuo to institute quality improvements. He is the first-ever quality guru the company has ever had.
Honda first recalled the Fit hybrid shortly after it debuted in October 2013 due to defective controls on its seven-speed twin-clutch transmission system. The maker recalled it twice after that for the same problem.
Can you imagine a U.S. auto maker cutting the CEOs compensation a million or two because of product defects. Fat chance. Some have taken a symbolic $1 annual compensation in rare instances but their compensation before and after more than made up for the $1 year.
The Asian culture still has some honor to it, unlike in the U.S., IME. We also however see Apple and many other companies using Chinese slaves to produce the products they sell in the U.S. I wonder how many U.S. consumers who buy $1000 iPhones know they are made by slaves in China who are tortured if they refuse to happily work 12 hours per day, six days per week – minimum? I wonder how many U.S. consumers know there have been over 10 suicides at Foxconn in China who produces a lot of Apple’s products for the U.S.
Satya Nadella just hauled in $80 million compensation for using these slaves while declaring that women in the work place aren’t entitled to equal pay to their male counterparts. He’s just the gut for the job at Apple…
It’s obvious that Satya and many other executives be they in the U.S. or Asia lack a moral compass. This is demonstrated daily.
Let’s hope all of the auto makers get a better handle on product defects before they reach consumers, especially the safety defects.