Are retail chief executives being smart or Stupid? It’s a good question and it may depend on your level of skepticism…or cynicism…or both.
Even as more than 1 million retail jobs have been eliminated, either through layoffs or furloughs mainly due to tens of thousands of retail locations being closed indefinitely because of the coronavirus pandemic, we’re also seeing retail CEOs cut their own pay too. Most of the companies have paired the layoff and salary cut announcements together in the best traditions of spinning the news as best as possible.
At the same time, some retailing companies are also forgoing stock buybacks (which must be killing them because the prices are so low right now) and some are eliminating dividends at least on a temporary basis.
In the bigger picture of these massive layoffs these actions may not be necessarily moving the financial needle substantially and are as much about public relations as fiduciary correctness. It shouldn’t be forgotten that much of a modern corporate CEO’s compensation is in the form of bonuses, stock options and other perks and most of these announcements over the past few weeks refer to “salary” not total take-home pay. It’s unclear what a CEO’s 2020 tax return will show for total income even if they are giving up their entire salaries during this period.
And of course what’s happening in the retail sector is going on throughout American business. Semler Brossy, the executive compensation company, recently reported that 97 companies in the Russell 3000 stock index had made reductions to CEO salaries as of the end of March. The average reduction was 67 percent.
But in the business of retailing, the pay cuts range from 100% to substantially less. Some companies have left it vague, perhaps on purpose. Here’s a rundown of a cross-section of retailing companies and their announced pay cuts. Note these are for the CEO only; cuts to chairmen, other C-level executives and others may or may not be different.
Check back here for updates as more companies announce similar actions.
Arcadia (Top Shop): Cut 100%
Bass Pro Shops: 100%
Bed Bath & Beyond: 30%
Boot Barn: 50%
Burlington: Cut 100%
Capri (Michael Kors): Cut 100%
Columbia: Cut to $10,000 (from approx. $3 million)
Dick’s: Cut 100%
Genesco (Journey): Cut 100%
Kohl’s: Cut 100%
Macy’s: Cut 100%
Neiman Marcus: Cut 100% (for April)
Nordstrom: Cut 100% (through Oct. 3)
Ralph Lauren: 50%
REI: Cut 100% (for 6 months)
Ross: Cut 100% (“until such time”)
Shoe Carnival: “Substantially Reduce”
Stage Stores: “At least” 25%
Steve Madden: Cut 100%
Urban Outfitters: “Reduced pay”