Honda Motor's president, 12 other executives to take pay cut

Cuts range from 10 to 20 per cent
||Last Updated: 10/27/2014

TOKYO (Reuters) — Honda Motor said on Thursday its president and 12 other executives would take an unprecedented, quality-related pay cut after the Japanese automaker announced the fifth recall in a year of its new Fit hybrid model.

The recall, which covers 425,825 Fit hybrid vehicles and other models in Japan, comes as Honda is facing lawsuits due to accidents involving airbags supplied by Takata.

"We have inconvenienced many customers, and we're deeply sorry," Honda spokeswoman Akemi Ando told reporters after announcing the latest Fit recall. Shares in Honda ended down 1.4 per cent on Thursday, under performing the benchmark Nikkei average. No injury or death has been reported from the defects, as with the previous four recalls, Honda added.

The recall will cost about $53 million, and the impact on earnings is minimal, Honda said. The overall cost of the five recalls involving the Fit hybrid now stands at ¥16.5 billion, it added.

Because the recall highlighted quality concerns, the company said that over the next three months, chief executive Takanobu Ito will take a 20 per cent pay cut while other senior executives including chairman Fumihiko Ike and executive vice-president Tetsuo Iwamura will give up 10 per cent of their pay.

Honda also said it had appointed senior managing officer Koichi Fukuo to oversee quality improvements across the organisation, the first time it has created such a role.

Honda said the latest recall was over two noise-related defects in the Fit and Vezel hybrids as well as some gasoline-engine Fit and N-WGN models. The automaker will also recall 183 cars overseas for the same glitch.

Honda first recalled the Fit hybrid in October 2013 for defective controls on its transmission system.

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