The head of the RV industry’s largest manufacturer has given himself what is likely the industry’s largest executive pay cut.
Thor Industries President and CEO Bob Martin has reduced his base compensation to zero and will forgo all cash compensation until further notice, the company has announced. The move follows the furlough of numerous employees of Thor Industries and its subsidiaries in recent weeks.
Thor’s remaining named executive officers and other key executives of the will be taking at least a 40 percent reduction in base salary and will forgo all other cash compensation resulting in an expected reduction of nearly 85 percent of their total compensation.
Thor’s board of directors have also reduced their cash compensation by 40 percent until further notice. Additionally, many employees across the company have seen a reduction in cash compensation. Thor also noted that under current market and business circumstances, it does not expect it will be paying any cash bonuses until further notice, which it believes will be likely through the end of its fiscal year, which ends July 31.
“We have been constantly evaluating the potential impact of COVID-19 since it spread to our markets became apparent,” Martin said. “Our management team recommended our compensation reductions in late March as we were evaluating compensation-related measures as a result of our shutdown. Reducing my compensation to zero and the rest of our NEOs by nearly 85 percent during this time is just the right thing as we implement significant cost savings measures, which include furloughs and compensation reductions, to our incredibly important team members.”
While Thor is currently in a strong cash position and has availability on its credit facility, Martin said, the uncertainty surrounding the impact of the virus on the company’s markets and the economy in general make prudent cash management the highest priority after employee safety. Thor is aggressively managing cash outflows with a focus on cash preservation as it works through the pandemic he said.
“With our highly variable cost structure, we have been able to significantly reduce our overhead and expenses as a result of temporarily shutting down a majority of our manufacturing worldwide,” Martin said. “It was important that we respond quickly to this challenge, and we have done exactly that which has resulted in significant expense reduction. We currently have significant cash on hand, and we have recently drawn down $250 million on our asset-backed line of credit out of abundance of caution for additional liquidity should it be needed. We expect to return to growth after the pandemic has passed.”
The company also noted that Thor and its subsidiaries worldwide are working to support the fight against COVID-19. Thor subsidiaries have made donations of face masks and other protective gear, as well as loaning travel trailers to be used by those affected, including the brave and tireless people who are fighting the pandemic on the front lines. The company has been pleased to see support from dealer partners who have provided RV’s to various agencies, first responders, and overburdened healthcare facilities in their communities.
“In these unprecedented times, strong leadership is essential,” Thor Industries Chairman of the Board Andy Graves said. “This includes an aggressive and dynamic cash management strategy, and both Thor’s management and Board are fully aligned and acutely focused on the unique challenges posed by this pandemic. Consequently, we are confident in our ability to sustain our market leadership through this challenging time.”