Brian Shore, the chief executive of Park Electrochemical Corp., is taking a voluntary 20 percent salary cut in "solidarity" with Park employees in California and Arizona who are working reduced hours, the company disclosed in a regulatory filing Wednesday.
Executive compensation experts said the move, though not entirely novel, is highly unusual in the corporate world.
Shore, 63, who stands to give up more than $70,000 of his fiscal 2014 salary of $357,760, also said he plans to donate his 2014 $40,000 bonus to charity as he has done for several years.
"I took a pay cut recently because electronics in the U.S. has been very weak since July," he said in a phone interview Wednesday. "As a result, our people in Arizona and California are not getting full work weeks. I felt as a matter of solidarity that I should be in the same boat."
Shore, whose father co-founded the Melville company in 1954, has routinely refused salary increases since fiscal 2001, though he has accepted option grants. His total compensation for fiscal 2014, ending March 2, would have been $721,160, including his full salary, bonus and option awards worth $323,400.
The top executive of Park's units in Fullerton, California, and Tempe, Arizona, also has voluntarily reduced her salary by 20 percent, and four other corporate officers and 14 vice presidents have taken 10 percent cuts, according to the filing. Those salary cuts were instituted "within the last two months" and will end Dec. 31, Shore said. The chief executive said he was uncertain when he would restore his own salary cut. "Maybe when the people in Arizona and California get their pay reinstated," he said. "We'll see."
Corporate governance experts said elective pay cuts by top executives are scarce.
"Voluntary salary cuts on the part of executives are rare, although chief executives occasionally agree to token salaries to show solidarity with employees, shareholders or other stakeholders -- high-profile examples include Edward Lampert at Sears Holdings and Raymond Dolan at Sonus Networks," said John Roe, head of advisory services at corporate governance consultancy ISS Corporate Solutions. "Less than 6 percent of chief executives at Russell 3000 companies disclosed salary reductions in 2014, with the median reduction being only 5 percent."
Shares of Park climbed more than 2 percent to close at $24.74 Wednesday, but since the beginning of the year, the stock has fallen about 14 percent. The company's stock market value is about $500 million.
In October, Park posted a 4.8 percent decline in second-quarter sales to $42.3 million amid shrinking profit margins.Shore said that Park has been relegated to "niche" markets in a highly competitive global electronics industry dominated by Asian companies. More promising is aerospace, where General Electric has become a major customer for Park's composite materials such as carbon fiber impregnated with resin. Those advanced materials are used instead of heavier metal parts for certain GE jet engines, including some that power the Airbus A320neo.