Toshiba slashes CEO’s pay by 90%

(Reuters) — Toshiba (TYO:6502) said it would slash its interim CEO’s monthly salary for the next 2 months by 90%, including previously announced cuts, following revelations of improper accounting at the Japanese conglomerate.

The company said yesterday that it would reduce Masashi Muromachi‘s monthly salary by 50%, on top of the 40% cut already in place. It said it would also dock the pay of other senior executives, and that an extraordinary shareholders’ meeting in September would consider any additional measures.

Toshiba also said it would hire more independent directors, including lawyers and accountants.

Earlier this month an independent panel found that former CEO Hisao Tanaka was aware the company had inflated its profits by $1.2 billion over a period of several years. Tanaka and a string of other senior officials resigned over their roles in what’s become Japan’s biggest accounting scandal since Olympus (TYO:7733) nearly imploded in 2011 over a similar, $1.7 billion accounting coverup.

Vice chairman Norio Sasaki and adviser Atsutoshi Nishida also stepped down after the 3rd-party report showed they played a part in the overstatement of profits going back to the 2008 financial year. A total of 8 officials resigned. The outside panel of accountants and lawyers said Toshiba had overstated its operating profit by ¥151.8 billion ($1.22 billion), roughly triple the company’s initial estimate.

Tanaka and Sasaki pressured business divisions to meet difficult targets and knew they were overstating profits and delaying the reporting of losses, amid a culture of not going against the wishes of superiors, the report said.

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