People shop in the produce area at a Loblaws store in Toronto in 2018.Nathan Denette/The Canadian Press
Two of Canada’s major grocers – Empire Company Ltd. and Metro Inc. – paid their executives near-maximum bonuses for their most recent, pandemic-boosted fiscal years.
They joined Loblaw Companies Ltd. in rewarding their top executives for robust sales over the past 18 months, which saw many Canadians replace restaurant spending with cooking at home and stocking up on essential household goods – a windfall for grocers.
The practice of paying executive bonuses has come under greater scrutiny in the pandemic, particularly at businesses that employ essential, front-line workers who can’t do their jobs safely at home.
The grocers all gave workers some form of “pandemic pay” – increased wages or bonuses – during the earlier months of the public-health crisis, but they scaled back or eliminated the pay later in 2020. Grocery retailers offered further one-time bonuses earlier this year (and in Empire’s case, reinstated bonuses in regions where stay-at-home orders were imposed). Other benefits, the grocers said, included paid time off for vaccinations, discounts and gift-card bonuses. But in the spring, Canada’s largest private-sector union, Unifor, called on companies to bring back universal, regular pay premiums for grocery workers during the pandemic.
Together, Loblaw, Empire (the parent company of Sobeys) and Metro have a combined market value of about $60-billion. They posted $100-billion in sales over the past 12 months, with just over $3-billion in profits, according to S&P Global Market Intelligence. While their single-digit profit margins are modest compared with those of other industries, for the past 12 months they’re up from prepandemic levels.
Empire paid its executives almost the maximum possible bonuses for its most recent fiscal year, which ended May 1, saying it easily exceeded its goals for sales and profits.
That meant a bonus of $2.71-million for chief executive officer Michael Medline, up from $1.41-million in the prior year. Four other top executives received payouts of $579,000 to $1.01-million. All five bonuses were almost or more than double their incentive pay of the previous fiscal year.
In the year that ended in May, 2020, Empire’s board decided to scale back bonuses for its top executives in recognition of the pandemic – specifically because blowout sales in the first three months of the crisis were not part of the annual goals. For the year that ended this May, however, Empire incorporated COVID-19 in its targets, setting a sales goal roughly in line with that of the prior year and a lower profit goal.
Empire said sales of $28.3-billion topped its target of $26.7-billion and reported net earnings of $701.5-million blew by the target of $548.1-million. Plugging those numbers into the formula gave executives almost twice their target bonuses, Empire said.
All told, Mr. Medline made $7.49-million in the year ended in May, including almost $3.1-million in stock awards. That’s below his $13.04-million compensation of the prior year, a number inflated by a special $6.9-million stock award designed to retain him for an additional six years. In the year ended in May, 2019, he made just under $5.5-million.
For the second straight year, executives at Metro also received almost the maximum possible bonuses after the company exceeded profit goals. For most, the payouts were slightly lower than in the previous year, however.
Metro paid CEO Eric La Flèche a bonus of $1.29-million on top of his salary of just over $1-million for the year that ended Sept. 25. He was eligible for a maximum bonus of just over $1.5-million. In the year that ended September, 2020, his bonus was $1.43-million.
Four other top executives of Metro who were eligible for bonuses equal to their salaries earned payouts of between $450,000 and $505,000 – 82 per cent to 99 per cent of the maximum. Their bonuses ranged from $450,000 to $600,000 in the previous year, with only executive vice-president Marc Giroux, the head of both e-commerce and the Quebec division, receiving the maximum payout for his division’s goals.
For the year ended Sept. 25, Metro set a target of $823.6-million in adjusted net earnings – essentially the same amount it recorded in the year that ended in September, 2020, in which more than six months of pandemic buying boosted results. Metro said that in setting the target it started out assuming a normal environment, then added pandemic-related sales.
Its adjusted net earnings came in at $854.2-million, above the maximum-bonus level for all executives except Mr. La Flèche, who has a higher profit threshold for a maximum bonus.
Metro said it experienced a strong increase in food sales in the first half of the year but declines in the second half, “as they cycled exceptionally strong levels” in 2020. It said pharmacy sales were hurt by an eight-week labour conflict at the Jean Coutu distribution centre, and expenses were up because of $104-million in pandemic-related costs, including $24-million in gift cards for front-line employees.
The executive bonuses are based on a mix of companywide earnings, divisional performance and individual goals, with Mr. La Flèche’s bonus most heavily weighted to the companywide profits.
All told, he made $5.02-million, including $2.24-million in stock and option awards, versus $5.07-million in the prior year.
Loblaw, which blew through its 2020 revenue goals but missed its target on profits, said in April that its board decided the company’s short-term bonus plan should pay out at no more than 150 per cent of target for any goal, rather than the 200-per-cent maximum the plan allowed for.
Loblaw executive chairman Galen G. Weston made $3.55-million, down from $3.67-million in 2019, including an annual bonus of $648,000, which was less than 2019′s annual incentive of $764,640. President Sarah Davis, who retired from the company in May, made $4.53-million, including a $1.35-million bonus, down from $1.59-million in 2019.
The Globe and Mail previously reported on Loblaw’s compensation figures, which were for the year ended Jan. 2, 2021, in April.
With files from Susan Krashinsky Robertson
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