By now, I think we all know about Nintendo's 3DS price cut, but that isn't the only thing getting slashed at Nintendo. Satoru Iwata, Nintendo's corporate president, has taken responsibility for the poor sales numbers and recognizes the probable loss that will accompany the price drop on the 3DS, and has announced that he will take a 50% pay cut, as well.
He won't be the only executive to be taking a major pay cut, either. In explaination of the pay cuts, Iwata himself said,
For cuts in fixed salaries, I'm taking a fifty percent cut, other representative directors are taking a 30 percent cut, and other execs are taking a 20 percent cut.
Hit the break to find out how and why this is happening.
The Japanese culture is very different from the American. For example, if you make a decision that costs your company millions or billions of dollars, you are held responsible for it. Or, in better terms, you hold yourself responsible for it. Unlike AIG executives, for example, who got bonuses for failing their company, Japanese executives will often times punish themselves for their wrongdoings.
Iwata, whose salary is around $2 million per year will take a 50% pay cut. Shigeru Miyamoto will also have his $1.2 million salary slashed. In addition, bonuses will be cut. These decisions were made because Nintendo doesn't want to make the same mistake with the 3DS that they made with the GameCube: not cutting the price when interest was too low. Iwata explains,
We decided that if we take brave measures now, there's high likelihood that a many players can enjoy the Nintendo 3DS in the future.
Not everyone is as positive about the move, though. Shares of Nintendo fell 21% upon the announcements, causing former Nintendo president Hiroshi Yamauchi to lose an estimated $540 million. It has to be frustrating to lose that much money because of your successor's decisions.