Global downturn spurs cost-cutting at Emerson
Ferguson-based Emerson has been trimming its corporate costs — including the base salaries of its top five executives — to offset the global economic downturn, Chairman and Chief Executive David Farr said Tuesday.
Shortly after he outlined 2008 results and 2009 predictions at the annual shareholders meeting, Farr said his base salary has been reduced to its 2007 level effective Jan. 1.
The company also has postponed workers’ pay increases for six months and trimmed its global work force from 141,000 in the fall to 134,000 workers, he said.
Emerson did this through plant consolidations in the fall and winter, a spokesman later explained.
The company makes a range of products, including industrial process controls, cooling equipment, network power products, appliances and tools.
This year, Emerson’s top executive was set to earn a base salary of $1.225 million, about 2 percent more than the base salary of $1.2 million he received last year. In 2007, Farr received $1.15 million.
Base salaries for the other four top executives remain at 2008 levels. Each was supposed to get a base increase of 4 percent to 5 percent.
Earlier Tuesday, Emerson reported better-than-expected earnings of 60 cents a share for the first quarter fast cash advance. Analysts polled by Bloomberg, on average, expected 57 cents a share.
Meanwhile, sales slipped because of lower volume and the stronger dollar. About 54 percent of Emerson’s sales come from overseas markets.
"We have entered very rough white-water rapids" that will continue for the next four to six quarters, Farr said during a conference call Tuesday afternoon.
The company lowered its full-year profit estimate to $2.70 to $2.95 per share on $23 billion to $23.7 billion in sales. In November, Emerson predicted income of $2.80 to $3.20 a share on sales of $23.5 billion to $25.5 billion.
Still, Emerson said cost cuts and restructuring plans offset a lower operating profit margin, and Farr emphasized the company’s more than $3 billion in operating cash flow.
Near the end of the meeting, which lasted about 20 minutes, shareholders re-elected six directors and approved the continuation of KPMG LLP as the independent accounting firm.
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