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.
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.