Mazda Chiefs’ Pay Cut Over Defect in Car

In a show of contrition that would be hard to imagine at a U.S. firm, Mazda Motor Corp. said Wednesday it will temporarily cut the salaries of its top executives for mishandling quality problems in some of its passenger cars.

Chairman Kenichi Yamamoto and 17 other executives will take salary cuts of 5% to 10% in the first three months of 1991. Since Japanese executives rarely earn more than a few hundred thousand dollars annually--far less than their American counterparts--the givebacks amount to a substantial personal blow to the Mazda officials.

“It’s the notion of top management falling on the sword first,” said James Abegglen, an expert on Japanese management. “It’s a loud message to the organization. The next step is to exact punishment from the staff.”

Akira Shigemasa, a Mazda spokesman, said: “This is not a disciplinary action. No one forced us to cut salaries. The president offered to cut his salary and other top executives agreed.”

The announcement came one day after the Transport Ministry publicly chided Mazda for trying to keep secret some problems in Luce model cars made between August, 1986, and January, 1987. The Luce, a top-of-the-line sedan, was not sold in the United States.

Only after the warning did Mazda agree to recall nearly 3,500 cars to replace defective switches that affected the operation of brake lights and cruise-control mechanisms in the car.

Earlier, a series of articles in Asahi Shimbun--Japan’s most prestigious daily newspaper--pounded the company for quietly replacing the switches on the automobiles of buyers who complained rather than moving quickly to warn customers of the problem and conducting a complete recall.

It is unclear if the delays that resulted from Mazda’s secretiveness resulted in any accidents.

While Mazda was heavily criticized in Japan for its irresponsibility, U.S. observers praised the willingness of Mazda’s senior management to accept blame for its misjudgments.

“Mazda is doing what it ought to do,” said Clarence Ditlow, executive director of the Center for Auto Safety, a nonprofit Washington group founded by consumer advocate Ralph Nader. “We would doubt that American companies would do the same.”

Ditlow noted that when Ford Motor Co. was fined $7 million in 1973 for falsifying auto-exhaust test reports, “Ford’s shareholders paid that fine instead of the executives.” Ford officials could not be reached for comment since the firm’s suburban Detroit headquarters is shut down for the holidays.

In contrast, Japanese executives have frequently taken the blame for problems in their companies.

In 1975, Japan Air Lines’ president and vice president resigned to take responsibility for a plane crash resulting from maintenance problems. Earlier this fall, the president of Sumitomo Bank stepped down because of illegal activities by the head of one of the bank’s branches.

The notion behind such resignations is that the head of the company represents the company. When a top official resigns--or in this case takes a pay cut--the firm hopes to show the public that it is truly sorry and plans to reform itself. Apology is a critical part of rehabilitation in the eyes of Japanese society.

By contrast, Abegglen said, “the U.S. company will fire the factory manager and the (quality control) supervisor and go gaily about their way.”

Times staff writer Tom Furlong in Los Angeles contributed to this story.