Retail CEO Shares Bonus With Workers
If only I had a $100 bill for every time I’ve heard a top retail chain executive talk about how frontline employees are the reasons for a given business’s success. This talking point has been echoed repeatedly over the decades during which c-suite compensation has jumped exponentially and associate-level wages have not. This backdrop is what makes last week’s report that Lord Wolfson, CEO of Next, the U.K.’s biggest department store chain, shared his $3.6 million bonus with full and part-time employees all the more remarkable.
In an email to staff, as reported by The Telegraph, Lord Wolfson wrote that he intended the act as a "gesture of thanks and appreciation from the company for the hard work and commitment you have given to Next over the past three years and through some very tough times."
Next’s CEO added, "The task of growing sales and controlling costs looks set to remain a challenge over the next few years. But if we continue with the hard work, intelligence, initiative and common sense of recent years, then we have every chance of continued success."
According to ABC News, only one other CEO of a public company has done something similar in recent years. Yang Yuanqing, CEO of Lenovo, shared his $3 million bonus with 10,000 employees. In retailing, Whole Foods founder John Mackey didn’t give his $380,000 bonus to workers, but donated it to charity.
"It’s the first time that any chief executive (in the U.K) has ever done anything like this," Alistair Mackinnon-Munson, a spokesperson for Next, told ABC. "All our staff of 19,400 will share in it as a cash bonus. It works out to about one percent ($186) of their basic salary."
Next workers, who will receive the bonus in July, received a two percent pay increase from the company in 2012. Lord Wolfson saw his pay increase 13 percent last year, according to The Guardian.
While the Next CEO’s act of generosity was welcomed by most, others said it highlighted out-of-control executive compensation practices.
The Guardian reported "top bosses" at Next made 185 times the average salary of workers at the chain last year. In years past, execs have seen double-digit increases in pay even while the rank and file had wages frozen.
The author of The Guardian article, Deborah Hargreaves, wrote that companies such as Next need to "see employees elected to boards and remuneration committees to break up the cozy club of directors who set each others’ pay. This is the only way to turn (Lord) Wolfson’s gift into more than a one-off gesture."
- Next chief executive Lord Wolfson donates £2.4m bonus to staff – The Telegraph
- Next boss gives away £2.4m bonus to staff – The Guardian
- Lord Wolfson’s gesture is welcome, but won’t curb executive pay – The Guardian
- CEO Gives Away His Bonus to Employees – ABC News
Do you think Lord Wolfson’s gesture will be meaningful to the employees who will share his bonus? Do you think there are problems with the current compensation system for retail company executives and employees? How would you fix it?