Honda president, executives take pay cut over recall issues

Honda Motor Co. took the rare step of imposing pay cuts on its president and 12 other executives after the fifth recall in a year of its new Fit hybrid model.

Head of Japanese automaker takes 20% cut, executives take 10% after series of recalls

Honda Motor Co. President Takanobu Ito will lose 20 per cent of his pay and 12 executives will lose 10 per cent over quality control issues at the Japanese automaker. (Shizuo Kambayashi/Associated Press)

Honda Motor Co. took the rare step of imposing pay cuts on its president and 12 other executives after the fifth recall in a year of its new Fit hybrid model.

The company said that over the next three months, CEO 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 have pay cut by 10 per cent.

They said the pay cut was related to lack of quality control over Honda products, with 425,825 Fit hybrid vehicles and other models recalled over noise-related defects and problems with the clutch.

The recall comes as Honda is facing lawsuits in the U.S. over accidents involving airbags supplied by Takata Corp. The airbags have been linked to four deaths in Honda cars, but are also installed on BMW, Chrysler, Ford, General Motors, Mazda, Mitsubishi, Nissan, Subaru and Toyota vehicles.

The U.S. auto safety regulator took the unusual step this week of urging eight million car owners to return their vehicles equipped with Takata airbags for repair.

The airbags have a defect that causes them to deteriorate over time and send metal shards flying during an accident, hurting drivers and passengers.

So far, the recall affects only southern states with high humidity, which increases the risk of a problem developing, but two U.S. senators have urged the regulator to make it nationwide.

No injury or death has been reported from the multiple Fit defects in Japan, Honda said. The company has spent $170 million so far on the Fit recall and faces millions more in costs over the Takata airbags.

"We have inconvenienced many customers, and we're deeply sorry," Honda spokeswoman Akemi Ando told reporters after announcing the latest Fit recall.

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