Working to retain its financial stability amid the volatility wrought by the COVID-19 pandemic, Rockwell Automation (NYSE:ROK) announced today that it plans to suspend payouts from its executive incentive compensation program for 2020. While the company faced headwinds in its second quarter from the effect of the pandemic in China, CEO Blake Moret said in today's press release that management "expect[s] that as COVID-19 impacts more countries and economies, we will face lower demand in many of our served industries for a period of time. As a result, we are taking pre-emptive actions to align the company's cost structure with this environment."
Although Rockwell Automation is implementing cost-saving measures, the company remains committed to rewarding shareholders, announcing earlier this week a $1.02-per-share quarterly dividend payable on June 10. This is the same amount it paid last quarter.
Besides the reduction in the executive incentive program, Moret will receive a 25% salary reduction, senior vice presidents will have their salaries cut by 15%, and other non-manufacturing employees will receive a 7.5% reduction in pay. Moreover, the cash fees paid to members of the board of directors are being reduced by 50%. Manufacturing employees will not see any salary reductions, plus they will receive a one-time additional payment to help alleviate their financial stress. The company will suspend its 401(k) retirement savings plan matches for U.S. employees and is eliminating "discretionary spend" throughout the company.
According to management, the cost-cutting measures are temporary, and they will be reversed when "markets recover." The company plans on releasing its Q2 2020 earnings results and a revision to its 2020 forecast, in addition to addressing the impact of its cost reduction initiatives, on April 28.