cutting position by 50%, page-2

My reasons for cutting the position by half:

From the article, it appears that this is more than just a 'tighten your belts' memo. We have the CEO foregoing 3 months pay. Also not mentioned in this link, but is in the full AFR article, the CEO is also foregoing 33yrs of leave entitlements.

Now for this to occur, something pretty drastic must be occuring. CEO's dont readily cut their salaries. Giving up 33 years of leave entitlements is also highly unusual.

I think the CEO has done this in order to make it easier to require his senior staff to work just four days per week with the fifth day being paid from holiday leave or accrued long service leave.

All this suggests that cash flow is tight.

Remember CKF is not debt free. It holds significant debt.
If CKF was debt free i would be alot more sanguine about everything. But with its debt holdings one needs to consider business risk, whereby cashflow is dropping, yet debt repayment and covernents need to be maintained.

The GFC has highlighted plenty of companies, whereby dilutionary capital raisings have occurred, where debt levels are too high and operating cash flow has come under pressure.

Sure the underlying business is a 'buffett' type business, people will still be eating KFC in 10 years time. But with debt, the OVERALL business is not a Buffett type business, because the short term operational issues (in this case a potential period of cash flow weakness) could have negative implications for financing risk.

ie this is more than just a short term operational issue.
The short term operational issue needs to be considered with reference to CKF's debt structure.