Nintendo Chief Executive Cuts Salary in Half After First-Ever Quarterly Loss

By Erin Harrison August 01, 2011

In what could be considered a positive example to Washington lawmakers who are still yet to reach a deal on raising the country’s debt ceiling, Nintendo’s chief executive is self-imposing a 50 percent pay cut to his salary following the Japanese company’s first-ever quarterly loss.

Nintendo president Satoru Iwata also told shareholders Friday he plans to slash prices on the Nintendo 3DS, which has experienced grim sales, according to a Digital Trends report.

In a director’s meeting this week, Iwata said the Nintendo senior management team will voluntarily cut their compensation, with Iwata taking the biggest hit in the form of a 50 percent reduction.

“We understand that the management responsibility this time is heavier than usual, and we have decided to reduce the fixed compensation as well, by reducing it by 50 percent,” Iwata told shareholders Friday.

“The deduction of the fixed compensation is what we volunteered to do in order to show our sincere attitude and to fulfill our responsibility,” Iwata said.

In addition, the directors decided on a 30 percent reduction for the representative directors and a 20 percent reduction for the other directors.

Nintendo’s latest quarterly earnings reflect a loss of 50.2 percent compared to the same quarter last year. Gross profit ratio was 11.7 percent, a drastic drop year-on-year, company officials said Friday. The main reasons were price reductions for Wii and Nintendo DS hardware, and a declining sales ratio of Wii first-party software, which has a relatively high margin over the total sales.

Yoshihiro Mori, senior managing director of Nintendo Co, said operating losses arose from a “sizable drop of gross profits along with a decrease in sales and gross profit ratio, and a rise of the total of selling, general and administrative expenses year-on-year.”

Advertising expenses were spent to spread Nintendo 3DS strongly throughout the markets, and research and development expenses were incurred related to development activities for products like Wii U that will be released in 2012, Mori added.

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Erin Harrison is Executive Editor, Strategic Initiatives, for TMC, where she oversees the company's strategic editorial initiatives, including the launch of several new print and online initiatives. She plays an active role in the print publications and TechZone360, covering IP communications, information technology and other related topics. To read more of Erin's articles, please visit her columnist page.

Edited by Jennifer Russell

Executive Editor, Strategic Initiatives

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