Toshiba’s interim chief executive will take a 90% pay cut in the midst of a massive accounting scandal that’s rocked the company.
The sharp reduction in Masashi Muromachi’s salary will affect the new CEO’s pay over the next two months as he attempts to repair the company’s battered balance sheet.
Toshiba said the pay cut was put in place because of its uncertain earnings outlook. The firm’s 2014 financial results have not yet been finalized, and it has scrapped the annual dividend for shareholders.
Several executives and directors will also have their salaries reduced.
Japanese conglomerate Toshiba, which makes everything from consumer electronics to nuclear energy technology, has been under fire for months over accounting irregularities. The company overstated profits by 151.8 billion yen ($1.2 billion) over a seven-year period, according to an independent committee.
Last week, Hisao Tanaka resigned as chief executive and president of Toshiba over the scandal.
“We are taking what has happened very seriously and we would like to apologize from our hearts to, starting with the shareholders, and to all the stakeholders,” Tanaka said at a news conference, announcing his resignation.
Eight board members, including vice chairman Norio Sasaki, also resigned their posts as part of a major management reshuffle.
The company said in a letter to investors that it would “take procedures to correct past financial results as necessary.”
The headache started in April, when Toshiba itself began investigating accounting practices in its energy division. Things got worse in May, after the company said an independent committee would be taking over the review. Toshiba postponed its earnings release and canceled its year-end dividend, prompting analysts to downgrade investment recommendations and earnings forecasts.
The company was founded in 1875, and quickly made a name for itself introducing technological advancements in Japan from electric washing machines to refrigerators, and later, the world’s first color TV. It’s now one of the world’s most recognizable consumer electronics brands.
