Japan’s Execs Take Pay Cuts When Earnings Fall

Donald Woutat’s article “GM Defends Its Executive Pay Plan” (April 2) indicated that GM lost $4.5 billion in 1991, Ford lost $2.3 billion and Chrysler $795 million and that U.S. corporate executives are paid so much more, but are doing so much worse, than their counterparts from Japan.

I also read with interest the following article in the March 31 issue of the Daily Japan Digest:

“Faced with bleak prospects for (fiscal year) ‘92, Hitachi (Tokyo) has decided to cut the pay of its top executives by 10% to 15% for the six months beginning April 1--and postpone annual raises for 9,000 other managers.

“Under the circumstances, the (electronics giant) decided to cut the salaries of its chairman, president and six vice presidents by 15% and 27 other executives by 10%. The company has agreed to a 4.7% pay raise for its 84,000 workers effective tomorrow, but 9,000 section chiefs and above won’t get it until October.”

This approach is common practice for Japanese executives. Before the employees are penalized, the “decision-makers,” who are paid much more when profits are up, are the first ones to assume the responsibility when profits are down.

Would Mr. Iacocca and his “partners of greed” ever consider such a solution?

FRED THORNLEY

Fullerton