Sonic Automotive which operates 95 U.S. car dealerships, started laying off and furloughing about a third of its workforce as the coronavirus pandemic crushed its sales. Then it changed its executives’ pay packages - handing them a multimillion-dollar windfall. On April 10, Sonic’s board gave its top executives stock options to replace performance-based share awards. The options it gave Chief Executive David Smith, whose family controls the company, are now worth about $5.16 million - more than four times the value of the performance-based stock awards he got last year. Sonic’s terminated employees, meanwhile, face hard times.
Sonic is one of six U.S. companies identified in a Reuters review of regulatory filings that have moved to shield their executives’ compensation from the pandemic’s economic fallout as they laid off or furloughed workers. The others include plush toy seller Build-A-Bear Workshop, restaurant operator Red Robin Gourmet Burgers, retailer Signet Jewelers, fashion brand DKNY owner G-III Apparel Group and fracking sand producer Covia Holdings. Reuters found 75 other companies that disclosed they are considering changes to executive pay plans in light of the pandemic’s impact on their businesses. Among them are ridesharing giant Uber Technologies, hotel operator Hilton Worldwide Holdings, carrier Delta Air Lines, satellite radio company Sirius XM Holdings and Thomson Reuters, the parent company of Reuters News.
Sirius XM said it “may be prudent” to change executive pay terms to ensure it can attract and retain “senior management talent.” Delta said in a filing that its performance measures no longer suited the “current reality” and that the value of executives’ incentive pay had declined by more than half in the pandemic. G-III and Signet said the changes were needed to retain management talent, while Build-A-Bear said the moves aligned the interests of executives with shareholders. Build-A-Bear, which sells customized stuffed animals, announced a 20% executive salary reduction in March as it furloughed more than 90% of its 4,300 workers. That translated to a cut of $142,800 from the $714,000 salary of CEO Sharon John. Two weeks later, however, the company granted its top management stock grants of roughly equivalent value to the salary cuts.
Covia, Red Robin, Uber and Hilton said in filings that uncertainty arising from the pandemic caused them to revisit performance pay. Thomson Reuters said in a filing that it had approved executive performance targets in February and early March without the benefit of being able to consider the pandemic’s impact on its business.
More than 500 companies in the Russell 3000 index have announced cuts to the base salaries of their chief executives, to save money or show they are sharing workers’ pain, according to compensation consultant Semler Brossy. Base salaries, however, account for only a tenth of the median pay of chief executives at the largest 500 U.S. companies, according to research firm Equilar. They earn the bulk of their compensation through stock awards.
https://www.reuters.com/article/us-health-coronavirus-ceopay-insight/u-s-firms-shield-ceo-pay-as-pandemic-hits-workers-investors-idUSKBN2341N9
Sonic is one of six U.S. companies identified in a Reuters review of regulatory filings that have moved to shield their executives’ compensation from the pandemic’s economic fallout as they laid off or furloughed workers. The others include plush toy seller Build-A-Bear Workshop, restaurant operator Red Robin Gourmet Burgers, retailer Signet Jewelers, fashion brand DKNY owner G-III Apparel Group and fracking sand producer Covia Holdings. Reuters found 75 other companies that disclosed they are considering changes to executive pay plans in light of the pandemic’s impact on their businesses. Among them are ridesharing giant Uber Technologies, hotel operator Hilton Worldwide Holdings, carrier Delta Air Lines, satellite radio company Sirius XM Holdings and Thomson Reuters, the parent company of Reuters News.
Sirius XM said it “may be prudent” to change executive pay terms to ensure it can attract and retain “senior management talent.” Delta said in a filing that its performance measures no longer suited the “current reality” and that the value of executives’ incentive pay had declined by more than half in the pandemic. G-III and Signet said the changes were needed to retain management talent, while Build-A-Bear said the moves aligned the interests of executives with shareholders. Build-A-Bear, which sells customized stuffed animals, announced a 20% executive salary reduction in March as it furloughed more than 90% of its 4,300 workers. That translated to a cut of $142,800 from the $714,000 salary of CEO Sharon John. Two weeks later, however, the company granted its top management stock grants of roughly equivalent value to the salary cuts.
Covia, Red Robin, Uber and Hilton said in filings that uncertainty arising from the pandemic caused them to revisit performance pay. Thomson Reuters said in a filing that it had approved executive performance targets in February and early March without the benefit of being able to consider the pandemic’s impact on its business.
More than 500 companies in the Russell 3000 index have announced cuts to the base salaries of their chief executives, to save money or show they are sharing workers’ pain, according to compensation consultant Semler Brossy. Base salaries, however, account for only a tenth of the median pay of chief executives at the largest 500 U.S. companies, according to research firm Equilar. They earn the bulk of their compensation through stock awards.
https://www.reuters.com/article/us-health-coronavirus-ceopay-insight/u-s-firms-shield-ceo-pay-as-pandemic-hits-workers-investors-idUSKBN2341N9
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