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The Container Store’s CEO Satish Malhotra is voluntarily taking a 10% pay cut to help cover the cost of higher salaries for staff despite a revenue downturn.
Malhotra, who became CEO in February 2021, will have his base salary temporarily slashed from $925,000 to $832,500 as of Oct. 1 through March 31, 2024, according to a recent Securities and Exchange filing. After the six-month pay cut, Malhotra’s $925,000 base pay will be reinstated.
Last year, his compensation also included stock awards valued at $2.57 million.
The Container Store confirmed to The Dallas Morning News that Malhotra voluntarily made the decision in response to expectations of an annual merit raise for about 5,000 employees who survived a recent wave of layoffs.
Container Store sales fell 21.1% during the quarter that ended July 1 compared to the year before amid broader weakness in the home category. In May, the chain announced a cost-containment program that included the elimination of open roles and workforce reductions.
In the tech space, the CEOs of Zoom, Twilio, and Micron Technology have all recently taken salary reductions amid downsizing efforts, although Bloomberg notes that CEO compensation is heavily weighted toward stock awards and options. Under pressure from institutional shareholders, Apple’s CEO Tim Cook agreed to reduce his target compensation package this year by around 40% to $49 million.
A Gartner survey of 10,080 employees taken in September 2022 found that 77% of employees say senior executives should be willing to take a significant pay cut before they reduce headcount or make changes to employee compensation. Only 31% would willingly take a temporary pay cut themselves if it meant avoiding layoffs.
A survey of 1,000 U.S. executives taken this past January from ResumeBuilder found that 66% have accepted a pay cut in the past six months to prevent or reduce layoffs.
Stacie Haller, chief career advisor at ResumeBuilder, told SHRM that CEOs or executives taking salary cuts isn’t common practice, but she believes such moves can show accountability and empathy from the C-level. On the downside, seeing executives accept salary cuts may send a message across the organization that the company is in trouble and could also lead executives to seek opportunities elsewhere. She said, “The market is still ripe, with several positions open for every job seeker.”