Mileage testing row: Osamu Suzuki to give up Suzuki CEO post

Tokyo/New Delhi: Japanese small car major Suzuki Motor Corporation Wednesday said its Chairman and CEO Osamu Suzuki will give up the CEO position while announcing pay cuts for its directors in the aftermath of the mileage testing controversy.

The company said its Executive Vice-President Osamu Honda will also retire as it 'deeply' apologised for "the improper conduct in application of driving resistance, different from regulations by the Ministry of Land, Infrastructure, Transport and Tourism (MLIT)".

The board of directors of Suzuki Motor Corporation (SMC) at its meeting held today resolved the issue of change of Representative Directors and reduction of compensation of the management, the company said in a statement.

"The change of Representative Directors and reduction of compensation for the management is to clarify the responsibility of the management against the improper conduct in application of driving resistance, different from regulations by MLIT," the statement added.

Subsequently, Suzuki, who is the designated Chairman and CEO, will give up his CEO title.

Osamu Honda, a Representative Director and Executive Vice-President, Chief Technology Officer will retire on June 29 June subject to approval of shareholders at 150th Ordinary General Meeting, SMC said.

Stating that the company will "promptly work on measures to prevent recurrence of such an incident in future", SMC said: "We express once again our deep apologies to our customers, clients and all stakeholders for any inconveniences and concerns caused."

On the reduction of executive compensation, SMC said bonus for financial year 2015 for its Representative Directors and Directors has been fully waived while for the Senior Managing Officers and Managing Officers, it has been reduced by 50 percent.

Furthermore, after July 2016, the monthly compensation of the Chairman will be cut by 40 percent for six months while that of President Toshihiro Suzuki by 30 percent for six months, it said.

The salary of Vice-Chairman Yasuhito Harayama will be reduced by 25 percent for six months and that of Managing Officers by 20 percent for the same duration.

The monthly compensation of Outside Company Directors will be reduced by 10 percent for three months, similar to those of Senior Managing Officers and Managing Officers.

Assuring that "disciplinary measures will be taken against the personnel concerned of the management level", SMC announced a slew of measures, including auditing system for engineering operations and promoting utilisation of whistle- blowing system, to prevent recurrence of such incidents.

Last month, SMC had admitted to discrepancies in emission and fuel efficiency testing process between the regulation by MLIT and the actual method carried out by it. A total of 16 models were subjected to investigation, but vehicles sold outside Japan were not affected.

SMC's arm Maruti Suzuki India had also clarified that the issue faced by parent in Japan did not have implications on India, citing distinct testing regulations.