Bad news if you were hoping for a nice Christmas present from Acer chairman and CEO J.T. Wang. The exec is forgoing a salary for his role as director and, indeed, waiving his 2010 bonus, as part of an attempt to make up for a $150m write-off over "high channel inventory and disputed accounts receivable in EMEA." The company hasn't detailed exactly what issues have been uncovered, simply describing it as "abnormalities in terms of channel inventory stored in freight forwarders’ warehouses."
However, it has also seen the Acer board voluntarily agree to halving their own renumeration, while employees' bonuses are set to be cut by 40-percent. 300 employees in the EMEA region will also lose their jobs. In fact, the only people left happy are likely to be shareholders, with the cash dividend going unchanged.
The investigation - which is believed to have turned up greater than expected stockpiling of Acer hardware - began after CEO Gianfranco Lanci resigned the company at the end of March. The move was said to be over differences in opinion on market strategy, with his replacement, Jim Wong, saying Acer would look to shift focus further back toward its core PC business.
Acer Chairman & CEO to relinquish his remuneration
Acer Chairman and CEO J.T. Wang is taking responsibility of the one-time write-off totaling US$150 million by relinquishing total remuneration from his position as director of the company board, as well as employee bonus of 2010.
With Acer’s substantial loss in write-off, Wang deeply feels regretful of the current situation and will dedicate his efforts fully to investigating the reasons behind the loss and to improving internal management.
Acer Board members cut 50% BOD remuneration and propose to reduce employee bonus by 40%
All members of Acer’s board of directors (BOD) have voluntarily committed to cut remuneration by 50%. The board will also propose for the shareholders’ meeting to reduce employee bonus for 2010 by 40%.
The BOD feels deep regret for shareholders’ loss as result of US$150 million write-off, thus all members made the decision to cut remuneration by 50% for 2010 and together face the difficulty. In addition, the BOD shall propose for the shareholders’ meeting to reduce employee bonus from NT$1.5 billion to NT$900 million, or by 40%. The difference will be allocated for year 2011’s operating expenditure. Acer hopes to recover its growth momentum soon.
The cash dividend of NT$3.6 per share will remain unchanged to protect shareholders’ interests.
Acer streamlines EMEA operation by reducing 300 employees
Acer plans to streamline its EMEA (Europe, Middle East and Africa) operation by reducing around 300 employees.
Taking prompt action to meet the market change and to face challenges ahead, Acer hopes that by lowering operating expense, the company can sooner get business back to the right track for growth.
The sum of compensation is estimated at US$30 million, but operating expenses will be reduced annually by US$30 million.
Acer EMEA to clear high channel inventory - Total onetime US$150 million write-off
Acer’s board of directors today agreed to take one-time action on recent findings of high channel inventory and disputed accounts receivable in EMEA (Europe, Middle East and Africa) operations. Acer will provide channels with US$150 million in sales allowance to clear inventory, which will result in operating loss of the same amount.
Following the replacement of former CEO and company reorganization, the new management team carried out internal audits of EMEA operations and discovered abnormalities in terms of channel inventory stored in freight forwarders’ warehouses, and in the accounts receivable from channels in Spain.
The investigation also found areas for vast improvement on managing channel inventory and accounts receivable, making Acer liable for loss. After thorough evaluation, the management team has recommended to the board of directors to take one-time action by providing sales allowance and working together with the channels to solve the current issue, resulting in US$150 million write-off in operation loss. Acer does expect, however, to put business back on the right track soon.
Acer will continue to identify the cause and related responsibility ownership, propose actions and make appropriate workflow adjustments to enhance future management.