THOR Industries has implemented a combination of pay reductions and furloughs as it manages through the COVID-19 pandemic.
As a result of the current business climate, the company and its subsidiaries have furloughed a number of valuable team members in many areas of its businesses. CEO Bob Martin reduced his base compensation to zero and will forgo all cash compensation until further notice. The remaining named executive officers (NEOs), and other key executives of the company, will be taking at least a 40-percent reduction in base salary and will forego all other cash compensation resulting in an expected reduction of nearly 85 percent of their total compensation. THOR’s board of directors has also reduced its cash compensation by 40 percent until further notice. Additionally, many employees across the company have seen a reduction in cash compensation. The company also noted that under current market and business circumstances, it does not expect it will be paying any cash bonuses until further notice, which it believes will be likely through the end of its fiscal year which ends July 31.
“We have been constantly evaluating the potential impact of COVID-19 since it spread to our markets became apparent,” said Martin. “Our management team recommended our compensation reductions in late March as we were evaluating compensation-related measures as a result of our shutdown. Reducing my compensation to zero and the rest of our NEOs by nearly 85 percent during this time is just the right thing as we implement significant cost savings measures which include furloughs and compensation reductions, to our incredibly important team members. While currently we are in a strong cash position and have availability on our credit facility, the uncertainty surrounding the impact of the virus on our markets and the economy in general make prudent cash management our top priority after the safety of our people right now. Accordingly, we are aggressively managing our cash outflows with a focus on cash preservation as we work through this pandemic.”
The company also noted that THOR and its subsidiaries worldwide, are working to support the fight against COVID-19. THOR subsidiaries have made donations of face masks and other protective gear, as well as loaning travel trailers to be used by those affected, including the brave and tireless people who are fighting the pandemic on the front lines. The company has been pleased to see support from dealer partners who have provided RVs to various agencies, first responders, and overburdened health-care facilities in their communities.
“With our highly variable cost structure, we have been able to significantly reduce our overhead and expenses as a result of temporarily shutting down a majority of our manufacturing worldwide,” said Martin. “It was important that we respond quickly to this challenge, and we have done exactly that which has resulted in significant expense reduction. We currently have significant cash on hand, and we have recently drawn down $250 million on our asset-backed line of credit out of abundance of caution for additional liquidity should it be needed. We expect to return to growth after the pandemic has passed.”
Written for RV Pro, April 7, 2020