Kennametal Inc.’s board cut Chairman and CEO Carlos Cardoso and other top executives’ base salaries 15 percent this week, the company recently said. The pay for workers was reduced by 5%. Relative to raises received September 2008, when Mr. Cardosa received a 33% increase and the mean workforce increase was 4%, the net impact of this move is a year to year reduction in pay for base workers of one percent, whilst Mr. Cardosa retains an 18% increase in addition to any stock benefits he may have. Although management might believe the workforce to be too stupid to notice this fact, the reality is that they aren't, and this won't be good for moral. Increased turnover and the consequent costs in terms of quality, rework, etc. may have an adverse impact on KMTs ability to compete, particularly if major threat Sandvik does not experience such moral issues.
