Nintendo president takes 50% pay cut

Iwata, board of directors volunteer to trim salaries to show accountability for poor financials as predecessor Yamauchi loses $300 million in stock value.

Nintendo is taking drastic measures this week after a poor financial report prompted the company to cut the price of the 3DS by one-third just months after the machine hit store shelves. In an investor briefing today, company president Satoru Iwata told shareholders that management was taking accountability for the performance in the form of some significant pay cuts.

Iwata may not be smiling today.

As the president of the company, Iwata is reducing his base pay by 50 percent, with the board of directors taking cuts between 20 percent and 30 percent. All of the executives stand to lose even more given that their year-end bonuses are dependent on the company's profits. Iwata gave no indication how long the base pay cuts would remain in effect.

"It is quite unusual for us to change the price in less than half a year from a product’s launch," Iwata told investors. "I am aware that realizing both the short-term and the mid-to-long-term profits is one of my responsibilities as part of the management. I feel greatly accountable for having to make the markdown shortly after the launch, for having damaged our consumers' trust, for having made a significant impact upon the financial forecasts, for the annual dividend now being expected to be significantly less than originally expected and for now forecasting that there will be no interim dividend."

It's not just the current management feeling the pinch of Nintendo's poor performance of late. Bloomberg News reports that former Nintendo president Hiroshi Yamauchi stood to lose as much as $300 million after yesterday's news sent Nintendo shares down 12 percent. As of March 31, Yamauchi was the single largest shareholder of Nintendo, owning 10 percent of the company. If his holdings in the company hadn't changed before yesterday, Yamauchi would have lost ¥24.2 billion, or $312 million.

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Discussion

306 comments
Rovelius
Rovelius

@Gelugon_baat Actually, I think a comment can get automatically removed if it receives enough negative votes.

Rovelius
Rovelius

A great sacrifice that just shows how much they care about their company. ...but, at the same time, releasing the 3DS with such a ridiculous launch line-up was bound to end up like this.

XanderZane
XanderZane

@Umar10000 said: @XanderZane How stupid do you think you sound? You just expect the character you're controlling to read your mind? Otherwise how the f@#k would you move?....exactly you sound like an idiot. Look at other industries they copy off each other all the time, but they all have something that set them apart from each other. **************************************************************** What the hell are you talking about? lol!! When you say "idiot" make sure you are looking in the mirror. Maybe you haven't caught up on current affair, but we can now control games without a controller. lol!! Amazing how technology has advanced since 1978. Yes, companies copy each other and the differences aren't all that great. You can usually tell when an idea or technical feature has been copied. Next time you place your hands on a keyboard, think hard and long before pushing the keys. We don't need anymore embarrassing comments on here.

XanderZane
XanderZane

@the_requiem said: @XanderZane: It is more of a cultural thing. For them some things are more important than money and honor being the top. Foundations of modern western civilization have been laid on capitalism which puts profit before everything else. ***************************************************************** Yeah I know. Even though Sony wouldn't do the same thing Nintendo did. Sony rarely cater to their consumers. I was shocked they actually gave away 4 free games. If their failure was such a big media exhibition, they probably would have done nothing. I'm sure they wanted to make themselves look good in front of the media world.

nocoolnamejim
nocoolnamejim moderator

Takes some stones to do this. Can't remember ever seeing the CEO of an American owned company voluntarily slashing his or her pay, let alone this dramatically. Kudos to Mr. Iwata.

The_Dragon_Born
The_Dragon_Born

I really respect Nintendo for a lot of reasons, one is their consoles don't break down all the time, and I'm not referring to just this generation either. Also they have quality games that don't nickle and dime people through DLC that should have been included anyway. And also most Nintendo games don't have 4 hr single player experiences like too many games you pay 60 bucks for now days. I'm sticking with Nintendo, and maybe one other company next year, depends on who has game next year

tframp420
tframp420

That's pretty damn big of them. Proves that respect and honor are still a big part of Japan's culture. Could you see some fat CEO in the US doing that? Hello no! Fire people!! Our CEOs pay themselves $1 a year so they can avoid taxes while laughing all the way to the bank! : )

daviniel
daviniel

Ouch...like..really...OUCH

renji4eva
renji4eva

this is bad, really bad. if nintendo doesn't sell alot of 3ds's and games this could be the very end of nintendo. if they shut down then i won't have luigi's mansion 2 and i waited to long for this.

Shadowmax889
Shadowmax889

@IAMTHEVIPQUEEN i don't know what pride you and must people said about Nintendo, They never in this administration looks themselves arrogant or anything in fact they are the most selfcritical company there is. I do not see Sony doing that or Microsoft in that maner. They just need kepping improving and the industry needs Nintendo continuig to be a hardware developer not just a 3P like Sega

IAMTHEVIPQUEEN
IAMTHEVIPQUEEN

they should just swallow their spiteful pride and turn themselves in like Sega did some years ago = win for everyone

education
education

Just wait until the wii u bombs!

Loudkid258
Loudkid258

RDB26 wrote: Help them out and go buy a Nintendo Game! @ RDB26- tell Nintendo to come out with some good games, and we will buy LOL!!

hatieshorrer
hatieshorrer

This must be why CEOs dont take pay cuts. Sony had four years of losing money out of the last five and layoff thousands but people still think Sony is doing fine. Nintendos CEOs take a pay cut but no reports of losing money or layoffs but people are saying Nintendo is at its end.

mattcake
mattcake

Throw yourself on your sword.

portej
portej

If there is one thing that I have learned in my time working in finance, it would be this: Markets always come back. Do not be fazed by short-term fluctuations. If the company in question has good fundamentals and a sound business platform, then sure, you might take a loss here and there due to market circumstances, but in the long run you will stand to gain. Moreover, the perfect time to buy in is when everyone else is scrambling to get out. With the share price down 12%, I say that is a respectable bargain that one could take advantage of.

B-boy
B-boy

nintendo won the battle but lose the war

txgamerwavg
txgamerwavg

I hope WiiU release to make the fan's happy.

Hellbishop
Hellbishop

An honourable deed whatever the reason may be which sends out a message of accountability and respect which is never a bad thing. Nintendo its like another name for sterling reputation.

lady_god
lady_god

i dont understand why people are so upset. it will be more affordable so now more people will have it, you wont feel so alone anymore. ive had the 3ds since its release date and ive only come across 3 people on my street pass. THREE PEOPLE!! on top of that nintendo is giving away 20 free games via eshop. TWENTY AWESOME CLASSIC GAMES so now i get to play entertaining classics like mario, mario kart, and yoshis island and fill up my mii plaza with more characters. not to mention online play will be alot more fun now. tell me again how this is bad news?

lithus
lithus

That's what happens when you stick to you're proprietary guns and not stay up-to-date with the big boys. Can only coast on the motion sensing thing for so long.....*smacks Iwata's hand* "what did we learn??" Maybe the next gen Nintendo will be just that...."An actual next Generation Nintendo console".

LpcWarrior
LpcWarrior

Maybe if they put out good games they wouldn't be in this mess.

sonicare
sonicare

His base pay is still probably a few orders of magnitude higher than mine. LOL.

RDB26
RDB26

Help them out and go buy a Nintendo Game!

foxfacer2d2
foxfacer2d2

@DrKill09 oh really?over the years of success? I don't think nintendo will finally die even the might Sony could not bring microsoft, apple, and nintendo down to it's knees. One thing is for sure nintendo will not die without a fight.

Malscyllis
Malscyllis

if only politicians did the same for America *sigh*

LOXO7
LOXO7

Nintendo shouldn't not don't die.

DrKill09
DrKill09

It's time for Nintendo to finally die. NES - great, saved gaming SNES - great, but games heavily censored N64 - huge letdown, but still some great games GC - only one or two good games, multiplatform games were always worst on GameCube Wii - horrid, horrid, gimicky console with no games. Or rather, hundreds of games that nobody wants to play As far as handhelds: Gameboy - great GBC - still good, but Sega did the same thing years before it GBA - no backlighting killed it. I do play GBA on my DS Lite, though. Still had a rather good lineup, although DKC trilogy was ruined. DS - best lineup yet. Touch screen actually worked well, and wasn't just a useless gimmick 3DS - no games, DOA They had a good run, but they haven't made a truely great home console since the SNES. Everything after that seems to be "different for the sake of different" without any real thought put into it.

foxfacer2d2
foxfacer2d2

sure this is no big news to the company and stuff. but it is a news to a certain person who would sacrifice for a certain honor and responsibility.

OriginalXboxGmr
OriginalXboxGmr

That's what happens when your company is selling a seriously outdated console, a 3D handheld system that has no good games and provides consumers with limited details on their next system. I give Iwata credit for making such a significant sacrifice, but in order for Nintendo to really turn things around, they need to start listening to their customers and come out with good quality games for its current consoles and making sure that the Wii U doesn't end up being an epic fail.

fredwv
fredwv

When given the option of the paycut or the honorable death, it really was an easy decision for Iwata.

LokiHero
LokiHero

In this comments section: People who don't understand financials giving their opinions on financial news. Frame_Dragger and digi-demon have it on the nose. This isn't news, this isn't new, and this isn't that big a deal to Nintendo. It's called good press and has next to nothing to do with the fortunes of the company, good or bad. Nintendo is still a powerhouse and a dip in stock price has very little to do with their ability to operate.

nkaiton
nkaiton

Poor guy. He'll only make 7 figures instead of 8 this year. In all seriousness, though, wouldn't it be great if American companies made pay cuts to punish their execs?

digi-demon
digi-demon

This loss while significant to most businesses is but a drop in the Ocean for Nintendo. I mean, what with all the good times with DS, Pokemon and the Wii sales over the past years this company's still got plenty of cash so it can roll with the punches - its just a media play to try keep some short minded miserable shareholders happy. Effect of development costs for 3DS and WiiU have probably impacted on profit margins more than slow sales have.

Dawg9000
Dawg9000

Very honorable thing to do. Nothing like hearing the "tragic" news of a company closing down. CEO gets millions while the employees get crap.

Scandals123
Scandals123

This is a heartening report, it shows that the Nintendo top dogs understand culpability in their endeavours, not like some UK bank bosses I could mention. Sure, they'll still be making a lot of money, but maybe they can give themselves a hearty bonus if the price drop and new software boosts the 3DS sales back up. Its a tremendous system, its just a shame that the only killer app thus far is Zelda

jambubby74
jambubby74

I think it is honorable when executives share the "pain" of shareholders. I sure beats the golden parachutes given to a lot of failing CEOs in the U.S.A. These sorts of pay-cuts are symbolic rather than meant to save Nintendo money in the long run. If profits spike again sometime in the future, I'm sure the president's salary will go back up.

the_requiem
the_requiem

@XanderZane: It is more of a cultural thing. For them some things are more important than money and honor being the top. Foundations of modern western civilization have been laid on capitalism which puts profit before everything else.

Jag-T1000
Jag-T1000

Why don't they just fire him? Thats what they do in the US. He decided to take the paycut so that they wouldn't fire him.

foxfacer2d2
foxfacer2d2

if nintendo would have died right now, the world is crazy.

Brokendemise
Brokendemise

I agree with fightingfish18. If only more executives in companies realized that it's because of their poor direction that their companies loose money, and it's them that should have to suffer the consequences not the employees (i.e. Bank of America, GM, Chrysler, CitiBank, etc.)

fightingfish18
fightingfish18

If only a congress could learn a lesson from the Nintendo execs :)

mario-nin-freak
mario-nin-freak

@Frame_Dragger Or maybe not. Most companies will decrease a small amount from their workers salaries, or cut costs on things consumers like, like free club nintendo rewards. It's a smart, considerate move. Whether there thinking of themselves or not, it still makes them a good company:roll:

s1monh
s1monh

The 3DS was just badly timed IMHO. The DS still has a massive user base as does the Wii. People are looking for quality titles to play not looking to buy new consoles, especially in a recession. There's a strange irony here as Nintendo helped bring the industry out of recession in the 80's by providing a quality product with quality software (the nes), at a time when the competition where saturating the market with rubbish. Maybe they could learn a bit more from the past...

parrot_of_adun
parrot_of_adun

I think the article makes it sound worse than it is...