- FCA's global salaried workforce to see a 20% cut in salary to avoid layoffs.
- CEO Mike Manley agrees to a 50% cut in his salary for the next three months.
- Group Executive Council members to receive a 30% lower salary in the same time period.
The Coronavirus pandemic has pushed global businesses into cutting costs to support their financial stature during the economically challenging time. In recent news, Fiat Chrysler Automobiles (BIT:FCA) said that it plans on cutting employees’ salaries by 20% in the next 3 months. The company said that the cut would be applicable to its white-collar employees only.
FCA’s chief executive officer, Mike Manley, highlighted in a letter on Monday that his own salary will also be cut by 50% for the next 3 months. The Italian-American car manufacturer also announced a 30% cut in the salaries of its executives who make up the company’s Group Executive Council (GEC). GEC is Fiat’s highest decision-making authority.
FCA Says Salary Cut Is To Avoid Layoffs
According to the CEO:
“Protecting the financial health of the company is everyone’s responsibility and naturally starts with myself and the leadership of FCA. The announced reduction in salaries is to avoid the layoff of any permanent employees.”
The automaker’s chairman, John Elkann, along with the rest of the board members were also reported in agreement to waive their remaining compensation for 2020. The announced salary cut, as per the company, will be applicable from Wednesday.
FCA’s announcement on Monday also highlighted the company’s plans of reimbursing its white-collar workers for the upcoming salary cuts by 15th March 2021. For now, the reduction in salaries will apply to the majority of the car manufacturer’s global workforce (salaried).
Fiat Chrysler Automobiles, however, is not the only one to resort to salary cuts to maintain its financial stature during the fast-spreading Coronavirus that has brought global operations to a near halt. Its staunch rivals, Ford Motor, and General Motors, had also announced similar strategies last week.
GM And Ford Also Resorted To Similar Strategies
GM said that its white-collar workers will see a 20% cut on their regular salaries while Ford announced a 20% to 50% reduction in the salaries of its top 300 executives for the next five months.
At the time of writing, FCA is exchanging hands at £5.64 per share in the stock market that translates to an over 50% decline in 2020 so far. The automaker also remained challenged in 2019 with an annual gain of close to 0.0% in the stock market.
Fiat Chrysler Automobiles currently has a market cap of £8.72 billion with a price to earnings ratio of 3.70.