Due to the novel coronavirus pandemic, the global coatings giant PPG industry has recently started to take temporary pay cuts by executives and other employees to protect cash flow. According to Tu Jie's exclusive news on April 11, PPG industry has recently announced a 15% - 30% reduction in the salaries of chaiman, CEO and all executives; in addition, the salaries of paid professionals will be temporarily reduced.
Vincent Robin, President of PPG Asia Pacific, said, "when we talk about the PPG approach, we 'run it as we own it.". Running it as we have it can mean making tough decisions with personal influence. Today we want to communicate specific interim actions. "
Tu Jie's reporter learned that this temporary action includes: last week, PPG announced that chaiman, CEO and all executives' salaries will be reduced by 15% - 30%, and the adjustment will take effect on April 1; salary reduction for salaried professionals: PPG will implement temporary salary reduction according to local regulations, and these adjustments will take effect on May 1, and are expected to last for six months.
"At present, the demand and workload in many parts of the world are decreasing, and we hope and believe that once the epidemic is controlled, the demand and workload will accelerate," Robin said. At that time, it's difficult to manage overlapping leave requests and anticipated increases in demand, so we strongly recommend that you take at least one week off in the next few weeks. Your human resources team works with your local manager to determine the best way to apply this approach consistently. "
Remuneration of some executives of PPG group in 2017-2019
According to the latest disclosure of executive compensation by PPG, Tu Jie learned that M. H McGarry's total salary last year was US $15117938 (about RMB 105.5 million), and that of the previous year was US $117844404, including US $1.265 million for basic salary, US $5.3334 million for stock award, US $2.666 million for option award, US $1.85 million for non equity incentive plan, US $3.8277 million for pension and deferred salary, and US $175300 for all other compensation US dollars.
In addition, V.J. Morales, senior vice president and chief financial officer of PPG group, paid US $380013100 (about RMB 26.51 million) last year, and US $2336266 last year; T.M., senior vice president of PPG group Knavish's total salary last year was $309445900 (about 21.59 million yuan), compared with $1935054 in the previous year; R.B. Liebert, executive vice president of the group, was $2114658 (about 14.75 million yuan), compared with $5679417 in the previous year; R Vadlamannati's total salary last year was $1945311 (about 13.57 million yuan).
According to the 15% - 30% salary reduction, the total salary reduction of the above five executives of PPG alone is about 3.91 million US dollars (27.28 million yuan) - 7.82 million US dollars (54.55 million yuan). Pay cuts, including other executives and paid professionals, can save PPG a lot of costs.
PPG industry, founded in 1883, is the world's largest paint manufacturer, covering automotive coatings, architectural coatings, wood coatings, industrial coatings, aerospace coatings, packaging coatings, ship and protective coatings. It has production bases and affiliated institutions in nearly 70 countries, including 14 in mainland China.
According to the financial report, PPG industry achieved sales of US $15.146 billion in 2019, down 1.5% year on year; net profit from continuing operations was US $1.243 billion, down 7.88% year on year. In addition, operating cash flow in 2019 totaled about $2.1 billion, an increase of about $600 million over 2018, a record high in any year. However, as of December 31, 2019, the total liabilities of PPG amounted to US $12.305 billion, and the total current liabilities amounted to US $4.375 billion.
According to PPG's previous expectation, the sales volume in 2020 will increase 1-3% year on year at fixed exchange rate. Excluding the impact of exchange rate, adjusted earnings per share will increase by 4-9%. "Our wide range of guidance reflects the increased level of uncertainty at this particular time. Our guidance includes diluted earnings per share for the first quarter, from $1.32 to $1.42 for continuing operations. " Michael H. McGarry, chairman and CEO of PPG, said earlier.
Li Mingyue, an observer for Tu industry, said that affected by the outbreak of the global new crown epidemic, most of the world's auto and parts manufacturers are currently idle; the manufacturing industries of ships, containers, mobile phones, home appliances, furniture, etc. have been affected, with different degrees of decline in production and sales. This is bound to impact the coating industry, PPG as a global operating company is inevitably affected, but different regions and different businesses are affected to different degrees.
Li Mingyue believes that under the influence of the new crown epidemic, the global paint market downturn this year has become a high probability event, and there is insufficient power for enterprises to increase revenue, even the risk of performance decline. In this case, it is the most direct way to improve profit and increase cash flow to control the cost, expense cost and expense saving within the enterprise. However, the salary of executives and employees is the largest fixed expenditure of the enterprise. Therefore, PPG adopts temporary salary reduction to reduce costs and increase cash flow, which is also the choice of short-term self rescue.
Li Mingyue said that the scope and duration of the new crown epidemic are beyond many people's imagination. At present, the global epidemic continues to spread, and it is unlikely to be effectively contained in the short term. For many coating enterprises, the business can not be expanded, but also bear the cost of enterprise management. Therefore, for many coating enterprises with tight capital flow and large fixed expenditure, the choice of salary reduction, suspension or even layoff has become the choice of short-term self-help.
Tu noted that at present, many coating companies around the world have taken positive actions to deal with the negative impact of the epidemic. Many companies began to raise funds or reduce costs through various ways, including applying for credit lines and loans to major banks, issuing bonds, layoffs, wage reductions, closing factories, selling low-efficiency assets, etc., to alleviate the shortage of cash flow Eyebrows are urgent. (coating boundary)
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