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Big cuts for BMW fat cats

By Samantha Stevens, 20 Mar 2009 Industry

Big cuts for BMW fat cats

The Bavarian carmaker is feeling the economic pinch, and warn employees that job and salary cuts are on the horison.

BMW is still in the black, but it faces some hard decisions if it wants to keep things that way.

The luxury manufacturer reported a profit of 330 million euros last year (AU$655 million), which sounds like a lot to us individuals - but is actually a huge 90 percent profit loss compared to the bumper 2007 results.

Keen not to come under scrutiny for cutting blue-collars while stuffing the white ones, BMW will cut the bonses of its board members by 40 percent.

However, UK paper The Independent revealed yesterday that 100,000 BMW staff also facing pay cuts. About 7,500 jobs have already been axed globally, and 4,000 staff have taken voluntary redundancies.

Senior executives will lose 30 per cent compared with last year, while the rest of company's workforce are facing a 10 per cent drop in their salaries. This should save BMW about 500 million euros a year (AU$993 million).

"2009 will be a transition year. This is why we have set clear priorities: liquidity, free cash-flow and working capital, fixed costs, investments. In other words, we are tightening our belts - just like any good businessman," said BMW CEO Dr Norbert Reithofer

"A profit-sharing programme for our board members, executives and all employees is an important element of our compensation system. We apply this system in good times as well as in challenging times. I am convinced that our employees understand the difficulty of the current situation and are willing to accept this hardship."

The Independent said that Reithofer will still get his 600,000 euro basic salary as usual, but his overall package will drop by €1.65m to €2.3m. Poor bloke.