CINCINNATI — Ted Richardson Sr. loved it last year when Kroger customers thanked him for coming to work during the COVID-19 pandemic.
“Made me feel like I was making a difference in a lot of people’s lives,” said Richardson, 51, of Evanston.
But he wasn’t as thrilled to learn this year that Kroger CEO Rodney McMullen got a 45% raise for guiding the Cincinnati-based grocery chain through the pandemic. That increase was fueled by an annual bonus plan that Kroger revised “because of the unique circumstances created by the pandemic,” even as it phased out hazard pay for lower-paid workers.
“Personally, I think all the workers should have gotten a 45% raise,” Richardson said. “They can’t make money unless we help them make money. So, what about us?”
Kroger declined to be interviewed, but offered a statement:
“Kroger has increased pay for associates by more than $800 million since 2018 and announced plans to continue to invest significantly in associate wages in 2021. This is in addition to the $2.5 billion Kroger has invested since the start of the pandemic to reward our workforce, better secure pensions, and implement safety measures nationwide.”
Kroger also recently signed a new labor contract for 20,000 employees between Greater Cincinnati and Toledo that will boost average wages above $20 an hour, said Kevin Garvey, president of the United Food and Commercial Workers Local 75 bargaining unit.
“It’s pretty strong,” Garvey said of the five-year agreement. “You can still make a full-time career at the Kroger company.”
But Garvey agrees with Richardson that Kroger should have shared more of its $2.6 billion profit last year with workers. And that sentiment is on the rise at dozens of U.S. companies that rely on low-wage workers to fuel their growth, said Sarah Anderson, director of the Global Economy Program at the Institute for Policy Studies, a liberal research organization based in Washington, D.C.
“The gap between CEO and worker pay have been extreme for a long time and have not made any sense,” Anderson said. “But during the pandemic its particularly galling to see people at the top being rewarded hundreds if not thousands of times more than people who’ve been out there every day keeping our economy going and helping to keep us safe.”
Anderson co-authored a 33-page report, “Pandemic Pay Plunder," that asserts “more than half of the country’s 100 largest low-wage employers rigged pay rules to give CEOs 29 percent average raises while their frontline employees made 2 percent less.” Kroger isn’t named in the report, but Anderson said the Cincinnati-based grocery chain engaged in the same behavior as the 51 companies criticized in her report.
“They cut their $2-per-hour hazard pay after a few months and median pay fell despite the risks for frontline workers, while CEO pay boomed,” Anderson said. “And when they had a chance to make the performance metrics genuinely challenging, they instead set a pretty low bar.”
Executive pay results
This is the ninth year that WCPO has analyzed the executive pay at publicly traded companies based in Cincinnati. This year’s analysis comes from the regulatory filings of 20 companies that reported payments of cash and stock to 99 local bosses, from the $204,020 paid to Cincinnati Bancorp. Chief Financial Officer Herbert Brinkman to David Taylor’s total compensation of $22.9 million at Procter & Gamble Co.
This is the second straight year that the pandemic was a big factor in executive pay. Last spring, five local companies announced pay cuts for top executives who were struggling to conserve cash and trying to avoid layoffs and furloughs.
Executive Pay 2020: Did your boss take a pandemic pay cut?
This year, 11 companies told shareholders they adjusted their pay programs in ways that both helped and hindered their executives’ ability to generate wealth.
For example, Atricure Inc., Cintas Corp., Hillenbrand Inc. and WCPO parent E.W. Scripps Co. all revealed reductions in base salary that impacted executives starting in the spring of 2020. Air Transport Services Group said two of its subsidiaries received “payroll support” through the CARES Act, requiring it to limit executive compensation as a condition of funding.
But several companies revealed changes that were more friendly to executives, including:
- Fifth Third Bancorp. excluded “certain items related to the impact of the COVID 19 pandemic” in the calculation of bonus awards, including “increases in the allowance for credit losses” in 2020, according to the bank’s proxy statement to shareholders. CEO Greg Carmichael received a $2.9 million bonus, up 30% from last year while his total compensation of $9.8 million increased 9%.
- Meridian Diagnostics Inc. added “kickers” to its “cash-based incentive compensation plan” to maximize “the revenue opportunity” from a global shortage of chemical reagents needed for COVID-19 tests. The original revenue target of $202 million was increased to $270 million for the maximum award. When the company finished the year at $253.7 million, CEO Jack Kenney qualified for a $958,770 bonus that was six times bigger than last year. His total pay increased 153% to $3.3 million.
- LSI Industries Inc. awarded a “partial discretionary bonus” totaling $546,590 to five executives after the lighting company fell $23.4 million short of the minimum net sales performance needed for bonuses and $137,000 short of the required profit goal. “The compensation committee considered the significant improvement in the company’s financial performance ... despite the impact of the COVID-19 pandemic,” said LSI's proxy statement. CEO James Clark’s $271,920 bonus wasn’t enough to avoid a 26% decline in total compensation to $1.1 million.
- Atricure Inc. also “used discretion to approve payout at 50% of target” in the company’s annual bonus plan, even though the company fell short of all three goals required for such a payment. “Many of the operational, financial and strategic goals of the annual incentive plan were rendered unattainable” by the pandemic, the proxy explained. “In spite of this, the Company made several advances on our key strategic initiatives.” CEO Michael Carrel, who announced a 35% reduction in his base salary at the start of the pandemic, ended the year with a 4% reduction in total compensation to $5.6 million.
Kroger shifts the focus
Kroger made several changes to its “annual cash incentive plan” after the pandemic sparked three months of binge buying from customers worried about running out of food, cleaning supplies and toilet paper. That rendered moot a previous sales incentive, which called for maximum awards for 3.1% sales growth. Kroger tracks sales excluding fuel at identical stores, meaning locations that have been open without major modifications for at least a year. In 2019, Kroger achieved ID sales growth of 2.1%. In March, it registered 30% growth, followed by 20% each in April and May.
So, the company altered its approach in three ways. First, it split the bonus plan into two parts, awarding a maximum bonus for the first quarter. Next, it adopted “more rigorous” goals for the rest of the year. The new goals included a maximum award for ID sales growth of 5%, which was ultimately eclipsed by Kroger’s 12.1% actual growth for the full year. Finally, Kroger added a “kicker” that allowed for an extra 10% bonus if the company achieved an unspecified market-share goal for produce.
Kroger Co. CEO Rodney McMullen
Although no one qualified for the produce kicker, McMullen got $5.7 million from the other two bonus pools, a 181% increase from his bonus award in 2019. That was a big factor in his 45% raise in total compensation and more grist for the mill of executive-pay critics like the Global Economy Program.
“It was really quite shocking to me to see that in the middle of a national crisis so much of the corporate boards’ efforts were going into figuring out how can they incentivize their CEO,” Anderson said. “This should have been a year when we should have all been working together and showing a spirit of shared sacrifice.”
Kroger was the only Cincinnati-based company that reported a decline in median pay, an 8.1% dip to $24,617. McMullen’s pay is 909 times that of its median worker, compared to 533 last year. That puts Kroger in the same ballpark as Walmart, where CEO Doug McMillan made 1,078 times the company’s median pay of $20,942
“There’s a lot of business research that shows that’s not just unfair: It’s also bad for business,” Anderson said. “It can damage employee morale which can lead to higher turnover rates. And we are seeing some large, low-wage employers facing staffing shortages now.”
In the meantime, union leaders like Kevin Garvey have shifted their positions from defending Kroger as a company that offers better pension and health benefits than its non-union rivals to one that failed to share the bounty when given the chance.
“These people deserved that money and the money was there to be distributed,” Garvey said. “If these people were comped a premium until the CDC said we’re out of the woods, you wouldn’t have heard a word out of us. It would have been great. But that’s not how the world is.”
"pay" - Google News
June 16, 2021 at 06:16PM
https://ift.tt/3vy3SLr
Executive Pay 2021: How the pandemic fueled corporate bonuses in 2020 - WCPO
"pay" - Google News
https://ift.tt/301s6zB
Bagikan Berita Ini
0 Response to "Executive Pay 2021: How the pandemic fueled corporate bonuses in 2020 - WCPO"
Post a Comment