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Coburg, Ore.-based Monaco Coach Corp., which last week said it was shuttering three production sites in Indiana and cutting 1,400 jobs, is also slashing executive compensation.
But, according to a report in the Portland Business Journal, it comes with a catch: the executives can earn back by reducing the recreational vehicle maker’s inventory.
Monaco’s board is implementing an executive pay reduction program, with CEO Kay Toolson taking the biggest hit, according to a July 16 filing with the Securities & Exchange Commission (SEC).
Toolson will see his base salary drop 50% under the program, followed by President John W. Nepute, whose salary drops 30%. Three other executives – Richard Bond, chief administrative officer, CFO P. Martin Daley, and Mike Snell, vice president of sales and marketing – will see base salaries drop 15%, according to the filing.
The program will cover a 12-month period starting with the third quarter of 2008 and ending with the close of the second quarter in 2009.
The executives can earn back portions of the lost salary once they reach a goal of having $58 million in operating cash flow created by the reduction of inventories, according to the filing.
Last Thursday, Monaco announced it was shutting down operations at production sites in Wakarusa, Elkhart and Nappanee, Ind., starting Sept. 17. The moves impact about 33% of the company’s total work force. Most of the work will shift to the company’s Coburg plant and facilities in Warsaw, Ind.
Shuttering the plants is expected to save Monaco $12 million per quarter as it faces dwindling demand for its vehicles.