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17 Apr 2009 06:00
BMW is slashing boardroom pay by 40%, executive pay by a third and employee wages and salaries by 10% in an effort to preserve cash and retain its independence in the current savage car-market downturn.
The German group had €8-billion in cash at the end of 2008, when it saw profits drop to €921-million from more than €4-billion the previous year after a sharp fall in demand in the final quarter.
Norbert Reithofer, BMW’s chief executive, told a press conference: “I am convinced that our employees understand the difficulty of the current situation and are willing to accept this hardship.” The dividend has been cut from €1.06 to €0.30 in a savage blow to shareholders.
Reithofer is paid a basic salary of €600 000, but saw his overall package last year cut to €2.3-million from €3.75-million in 2007, largely because his bonus was slashed in half to €1.65-million.
One official said: “I can live with this. At least I’ve got a job, a flat and a car.” But it is unclear how the 100 000-strong workforce will react after seeing a net 5 700 jobs go last year, 6 000 temporary staff lose their posts, including 850 at the Mini factory in Oxford, England, and plants put on a four-day week.
Reithofer said short-time working would be extended into April at core German plants, but ruled out compulsory redundancies and closures, and insisted that BMW was responding to calls from Germany’s chancellor, Angela Merkel, for the 30 leading companies in Frankfurt’s Dax index to retain staffing levels.
“I’ve worked in this industry for many years and I’ve never seen a downturn like this,” he added.
He emphasised that “our goal is to maintain the BMW group’s independence” and scotched widespread speculation that it would consider merging with Mercedes or even Peugeot Citroen as the industry experiences its worst post-war crisis; he also ruled out a takeover of Opel, which is seeking a €3.3-billion state-backed rescue.—
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