Companies around the world are finding more ways to cuts costs and deal with the coronavirus, and Caterpillar Inc. (NYSE: CAT) is no different. In this case, Caterpillar is slashing executive pay and cutting incentives.
CEO Jim Umpleby, senior executives, management and salaried workers will not get a base-pay increase in 2020. in addition, these employees will not receive the payout outlined under an annual incentive plan. The company also said it will not pay out bonuses to eligible employees next year.
Note that this decision was made less than a week after Caterpillar pulled its 2020 outlook and suspended some operations. The company previously confirmed it laid off employees at its East Peoria building KK as part of actions taken to reduce production due to weaker customer demand.
Company spokesperson Kate Kenny commented in an email about the cost-cutting measures: “These decisions are difficult and were not made lightly, but we must act with a sense of urgency to respond to this extremely challenging situation created by the pandemic,”
When Caterpillar made the update about guidance, the company detailed in the release:
Caterpillar’s financial results for the first quarter and remainder of 2020 will be impacted by the above factors and the continued global economic uncertainty due to the COVID-19 pandemic. As a result, Caterpillar is withdrawing its financial outlook for 2020 provided in the press release filed as Exhibit 99.1 to its Form 8-K filed on January 31, 2020. Further updates will be provided in Caterpillar’s first-quarter earnings announcement and conference call on April 28, 2020.
Caterpillar’s financial position remains strong. On a consolidated basis, Caterpillar ended 2019 with $8.3 billion of cash and available global credit facilities of $10.5 billion.
Caterpillar stock traded down about 3% on Wednesday, at $112.55 in a 52-week range of $87.50 to $150.55. The consensus price target is $134.00.
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