April 2020 Australian Financial Review
Senior executives at hearing implant maker Cochlear are taking at least a 20 per cent reduction in their base salary, in the latest effort from the medical device company to do everything it takes to hold on to its workforce. The company has taken a big hit from the COVID-19 pandemic, which has resulted in elective surgeries being put on hold by hospitals globally.
Dig Howitt is confident there will be a reasonably rapid bounce-back in implant surgeries once the pandemic is controlled
The business has already withdrawn its 2020 financial year guidance and completed an $880 million equity capital raising to shore up its books, as it stares down the barrel of one of the toughest years in its history. Chief executive Dig Howitt is going a step further than his C-suite team, taking a 30 per cent reduction in his base salary. Cochlear's board has also committed to 30 per cent reductions in board and board committee fees. Cochlear chairman Rick Holliday-Smith said a temporary pay reduction for the company's executives would help share the burden of the coronavirus hit with employees and stakeholders. "Cochlear is making every effort to retain its highly skilled workforce and continue to invest in its R&D programs throughout the COVID-19 pandemic," he said. "Cochlear has already taken action to manage costs, reducing all non-essential spending and capital expenditure for the balance of the financial year. Since the outbreak of COVID-19, we have taken steps to ensure the health and safety of our employees, continued to support our clinics, professional partners and recipients while ensuring the financial stability of the company."
As well as raising $880 million via an institutional placement, Cochlear is currently raising up to an extra $50 million via a share purchase plan for retail investors. The company had no trouble getting its raising away – existing institutional shareholders took out the entire sum. London-based investment firm Veritas Asset Management took up 34 per cent of the capital raising, spending $304.5 million.
Despite the challenging period, Mr Howitt said he was confident there would be a reasonably rapid bounce-back in implant surgeries once the pandemic was controlled. "We see this as temporary. What we don’t know is how long this will go for, but I do believe that this will pass and hospitals will re-open in a more normal way of working ... and what we do know is the incidence of hearing loss won’t change and the proportion of the global population with hearing loss is increasing," he said.
Within six to eight weeks, China was already back at 60 per cent of its usual implant surgery volumes