Mazda executives' pay cut in wake of car recall

December 27, 1990|By Los Angeles Times

TOKYO -- In a show of contrition for mishandling quality problems in some of its passenger cars, Mazda Motor Corp. said yesterday that it will temporarily cut the salaries of its top executives.

Chairman Kenichi Yamamoto and 17 other executives will take salary cuts of 5 percent to 10 percent in the first three months of 1991. Japanese executives' salaries are much smaller than those of their U.S. counterparts, but the reductions still constitute a personal blow to the Mazda officials.

"It's the notion of top management falling on the sword first," said James Abegglen, an expert on Japanese management. "It's a loud message to the organization. The next step is to exact punishment from the staff."

The announcement came one day after the Transport Ministry publicly chided Mazda for trying to keep secret quality problems in Luce model cars made between August 1986 and January 1987. The Luce was not sold in the United States.

Only after the warning did Mazda agree to recall nearly 3,500 cars to replace defective switches that affected the brake lights and cruise-control mechanisms in the car.

The Mazda action came after a series of articles in the Japanese newspaper Asahi Shimbun criticized the company for quietly

replacing the switches on the automobiles of customers who complained rather than warning customers of the problem and conducting a recall.

It is unclear whether the delays that resulted from Mazda's secretiveness resulted in any accidents.

Although Mazda was heavily criticized in Japan for its irresponsibility, U.S. observers praised the willingness of Mazda's senior management to acknowledge blame for misjudgments.

"Mazda is doing what it ought to do," said Clarence Ditlow, executive director of the Center for Auto Safety, a non-profit group in Washington, D.C. "We would doubt that American companies would do the same."

Mr. Ditlow noted that when Ford Motor Co. was fined $7 million in 1973 for falsifying auto-exhaust test reports, "Ford's shareholders paid that fine instead of the executives."

In contrast, Japanese executives have frequently taken the blame for problems in their companies.

Earlier this fall, for example, the president of Sumitomo Bank resigned to take responsibility for illegal activities by the head of one of the bank's branches.

The notion behind such resignations is that the head of a company represents the company. Through resignations or pay cuts, a company hopes to show the public it is sorry.

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