Hmm, let's see, Acer finds that they have an inventory problem, and has decided not only to provide their sales channels $150m to get rid of the inventory ASAP, but they have cut their bonus pool by 40%, the directors cut their own pay by 50%, and the CEO/Chairman is not taking a bonus at all. A few banks I can think of could learn from them.
Acer takes measures to put business on track
Press release, June 1; Joseph Tsai, DIGITIMES [Thursday 2 June 2011]
digitimes.com
Acer's board of directors has agreed to take one-time action on recent findings of high channel inventory and disputed accounts receivable in Europe, Middle East and Africa (EMEA) operations. Acer will provide channels with US$150 million in sales allowance to clear inventory, which will result in operating loss of the same amount.
Following the replacement of former CEO and company reorganization, the new management team carried out internal audits of EMEA operations and discovered abnormalities in terms of channel inventory stored in freight forwarders' warehouses, and in the accounts receivable from channels in Spain.
The investigation also found areas for vast improvement on managing channel inventory and accounts receivable, making Acer liable for loss. After thorough evaluation, the management team has recommended to the board of directors to take one-time action by providing sales allowance and working together with the channels to solve the current issue, resulting in US$150 million write-off in operation losses. Acer does expect, however, to put business back on the right track soon.
Acer will continue to identify the cause and related responsibility ownership, propose actions and make appropriate workflow adjustments to enhance future management.
As the same time, Acer also plans to streamline its EMEA operation by reducing around 300 employees.
Taking prompt action to meet market change and to face challenges ahead, Acer hopes that by lowering operating expenses, the company can sooner get business back to the right track for growth.
The sum of compensation is estimated at US$30 million, but operating expenses will be reduced annually by US$30 million.
Meanwhile, all members of Acer's board of directors (BOD) have voluntarily committed to cut remuneration by 50%. The board will also propose for the shareholders' meeting to reduce employee bonuses for 2010 by 40%.
The BOD feels deep regret for shareholders' loss as result of US$150 million write-off, thus all members made the decision to cut remuneration by 50% for 2010 and together face the difficulty. In addition, the BOD shall propose for the shareholders' meeting to reduce employee bonus from NT$1.5 billion (US$52.4 million) to NT$900 million, or by 40%. The difference will be allocated for year 2011's operating expenditure. Acer hopes to recover its growth momentum soon.
The cash dividend of NT$3.60 per share will remain unchanged to protect shareholders' interests.
Acer Chairman and CEO JT Wang is taking responsibility of the one-time write-off totaling US$150 million by relinquishing total remuneration from his position as director of the company board, as well as employee bonus for 2010.
With Acer's substantial loss in write-off, Wang deeply feels regretful of the current situation and will dedicate his efforts fully to investigating the reasons behind the loss and to improving internal management. |
