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Mar-13-2009Black & Decker to cut salaries to shave costs(topic overview)
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The Black & Decker Corp. said Friday it's cutting the base salaries of top executives and ending contributions to retirement programs because "unprecedented challenges of the global economy" have cut into its revenue. The power tool maker said in a regulatory filing that it's also cutting base salaries for other workers by between 2.5 and 5 percent. Spokesman Roger Young said the company isn't disclosing how many workers will see their paychecks reduced but says the cuts affect all U.S. salaried employees. Hourly workers won't see their wages reduced. [1] The salary cuts do not affect hourly workers at the company's plants, said spokesman Roger Young. The company will also suspend its match on employee contributions to its 401(k) program and supplemental retirement savings plan.[2]
Starting with the first pay period of April, the Towson-based company said base salaries of top executives will be cut by 10 percent; exempt employees 5 percent; and non-exempt workers 2.5 percent.[2]
The company has only 270 unionized workers across the country. No hourly plant workers are having their pay cut.[3]
Black & Decker "intends to implement similar cost-cutting actions wherever possible throughout its world-wide business," the company said in a filing with the Securities and Exchange Commission. The company is not disclosing cost savings from these moves until its first-quarter earnings conference call in April. The moves come after the tool maker cut 1,200 jobs worldwide earlier this year in anticipation of steep sales declines in the coming quarters.[2] The changes are to take effect in April, according to the regulatory filing. It wasn't immediately clear how much money the Towson, Md. -based manufacturer hoped to save. The company said it planned similar actions in its international units. In January, Black & Decker said its fourth-quarter profits skidded 77 percent, weighed down by restructuring charges and declining demand. It cautioned that first-quarter sales would likely drop about 20 percent and the company planned to cut 1,200 positions.[1]
The Towson-based company is also suspending matching contributions to employee retirement plans. "The corporation intends to implement similar cost-cutting actions wherever possible throughout its worldwide business," Black & Decker said in a regulatory filing.[4] TOWSON, Md. The Black & Decker Corp. says it's cutting the base salaries of its top executives while ending its matching contributions to employees retirement savings programs.[5]
The Corporation's match on employee contributions to the Retirement Savings Plan and Supplemental Retirement Savings Plan will be suspended. The Corporation intends to implement similar cost-cutting actions wherever possible throughout its world-wide business. All of these reductions will be implemented to the extent permitted by applicable laws and contractual obligations.[3]
The company matched 50 percent, or 3 percent, of employee contributions of up to 6 percent, Young said.[2] Cutting executive base pay by 10 percent, non-union pay for exempt employees by 5 percent and union pay by non-exempt employees by 2.5 percent.[3]
Power tool sales were down 13 percent. Black & Decker (NYSE: BDK) has also forecast double-digit sales declines for its current quarter. [4] Black & Decker, whose fourth quarter earnings fell 77 percent, cut 1,200 jobs last quarter.[4] Black & Decker says the "unprecedented challenges of the global economy" have hurt revenues, leading to the cuts.[5]
Sales for the quarter decreased 17 percent to $1.4 billion, with actual declines aggravated by a strengthening of the dollar. [2] During the fourth quarter, every division saw double-digit declines in sales.[4]
SOURCES
1. Black & Decker to cut salaries to shave costs - Forbes.com
2. Black & Decker cutting salaries and 401(k) match -- baltimoresun.com
3. Jay Hancock's blog: Black & Decker slashes pay, retirement contribution - Economic navigation and sightseeing - baltimoresun.com
4. Black & Decker slashes salaries - Washington Business Journal:
5. Black & Decker to cut salaries to shave costs - BusinessWeek
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