Tuesday, Sony announced The layoffs will affect 900 jobs in its PlayStation division, or about 8% of the unit's staff worldwide. The move follows other video game holidays this year, such as of Microsoft decision to let go of 2,000 people at its games division and Unity Software”reset the company” which included eliminating 25% of its workforce.
Faced with layoffs, some employees they are asking why some CEOs don't take pay cuts, similar to what former Nintendo CEO Satoru Iwata did in 2013 when he took a 50% pay cut to avoid layoffs.
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Iwata DECLARING at the time that although “some employers publish their restructuring plan to improve their financial performance by letting a number of their employees leave”, he decided not to do so because “at Nintendo, employees make valuable contributions to their respective fields, so I believe that laying off a group of employees will not help strengthen Nintendo's business in the long term.”
Satoru Iwata, former president of Nintendo Co., speaks during an interview in Tokyo, Japan, Thursday, May 8, 2014. Credit: Tomohiro Ohsumi/Bloomberg via Getty Images
Some CEOs have already followed suit.
Zoom CEO Eric Yuan took a 98% pay cut. Salary $301,731 last year and decided not to receive his 2023 corporate bonus after the company laid off him 15% of her team or about 1300 people.
In the year 2023 The resume builder report66% of executives surveyed said they took a pay cut in the past six months – 94% of whom said it was to prevent or reduce layoffs.
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However, salary isn't the only means of compensation for a CEO, so taking a few pay cuts isn't as much of a sacrifice as it seems. Juan, for example, directly controls more than 13% of Zoom, according to Bloomberg, which puts his fortune at around $5 billion. And CEOs still do almost 400 times more as an average worker.
Here are two reasons why CEOs may not cut their pay to avoid job cuts:
1. Math doesn't add up
CEOs who don't take pay cuts may cite economic reasons. According to Chris Williams, a former vice president of HR at Microsoft, some CEOs may believe that cutting their pay in half would not have the same economic impact as laying off employees; the numbers would not balance.
At companies like Google or Microsoft, eliminating 10,000 employees “saves them about a billion dollars a year in costs,” Williams wrote. on Business Insider. “Cutting CEO pay entirely would only save 0.2% of that.”
2. Companies do not need to retain existing talent
Iwata took a pay cut to keep morale high while Nintendo employees worked on it profitable The Switch console, which came out in 2017.
Nintendo “had to keep that talent,” executive coach Rohan Verma said CNBCand a CEO who follows Iwata's lead by taking a pay cut must ensure that “the company's strategy is still sound, or that the products they offer are still fit for the market.”