A Metro grocery store in Stouffville, Ont. on Jan. 12. Metro recorded $1.01-billion of profits for the year, the company said.Fred Lum/the Globe and Mail
Despite a strike by some of its Toronto-area workers, grocer Metro Inc MRU-T. blew past its profit targets and paid its executives the maximum possible bonus for corporate performance in its most recent fiscal year.
However, a cybersecurity breach at Empire Co. Ltd. EMP-A-T, parent of Sobeys, reduced executive bonuses and caused a cut in total pay for top executives in its most recent fiscal year.
Metro chief executive Eric La Flèche saw his total compensation increase 14 per cent, to $6.11-million, largely from an increase in stock awards.
In explaining its compensation decisions in a disclosure this week, the Quebec-headquartered grocer said that for the first time in the company’s history, sales for the fiscal year exceeded $20-billion and profits reached $1-billion.
The five-week summer labour conflict at 27 Metro stores in the Greater Toronto Area cost Metro $36.3-million, it said. Roughly 3,700 Metro workers walked off the job and workers also picketed at two of the company’s distribution centres, briefly preventing fresh products from reaching stores.
Metro reached a deal with the union in late August, which included wage increases as well as improvements to pensions and benefits. New hourly rates for full-time clerks will reach $25.05 over the course of the deal.
In Metro’s most recent fiscal year, “food sales were strong, driven by inflation and a strong performance from our discount banners,” the company said in its management information circular, filed Wednesday evening. “The company’s teams worked diligently in the high inflation environment to deliver value to customers with competitive everyday prices, growing private label sales and effective promotional strategies.”
Metro set a goal of $956.6-million in adjusted net earnings for fiscal 2023, which ended Sept. 30, about 5 per cent higher than the previous year. It recorded $1.01-billion of profits for the year, the company said. (Metro adjusted its figures for the amortization of an acquisition and an unusual tax adjustment.)
Metro paid Mr. La Flèche a bonus of just under $1.5-million – less than the company’s payout formula prescribed. The company said he earned $1.64-million under the plan, but requested a downward adjustment, with the resulting amount close to his bonus in the previous fiscal year.
Mr. La Flèche and other top Metro executives came short of their maximum overall bonuses because certain undisclosed division-level goals were not met, Metro said. Bonuses for four other top Metro executives ranged from $450,000 to $600,000.
Metro paid Mr. La Flèche a salary of $1.1-million in the 53-week fiscal year. He received $2.14-million in stock awards, nearly $900,000 more than in the previous year.
Mr. La Flèche renegotiated his employment contract in 2023 to boost his short-term and long-term incentive opportunities, Metro said. The company said Mr. La Flèche’s target compensation of $5.5-million remains below the median of the company’s self-selected group of comparison companies, despite his having a longer tenure as CEO than many of his peers.
Empire – which closed its fiscal year May 6 – was hit with a cybersecurity breach in November, 2022. It shut down many of the retailer’s pharmacy services over a roughly four-day period, and disrupted other operations for approximately one week, including self-checkout stations and the redemption of gift cards and Scene+ loyalty points.
The incident cost the company millions in legal fees, spending to restore software and other costs, which affected its finances through sales declines and reduced operations. Empire is still handling claims under its cyber insurance policies more than a year later, and has estimated the cost of the breach will represent approximately a $32-million impact after insurance recoveries.
In March, 2023, CEO Michael Medline said the company would accelerate its investments in cybersecurity, which were already planned for the years ahead. “These cyberattacks are a nasty piece of business. I wouldn’t wish them on my worst enemy,” he said at the time.
Mr. Medline saw his total pay for the fiscal year drop 22 per cent to $6.77-million. The chief culprit in the decline was a bonus of $1.11-million, down from $2.68-million in the previous year.
Pierre St-Laurent, the company’s chief operating officer, saw his pay drop nearly 30 per cent, to $2.59-million.
Empire bases its annual bonus on undisclosed goals for sales and profits and other key performance indicators. While Empire’s sales were 99 per cent of the undisclosed target, its earnings were 87.4 per cent of target. Its KPI performance was 72.5 percent of target because it fell short of environmental and sustainability goals.
Mr. Medline would have received a $1,625,000 bonus if Empire hit its targets exactly and a maximum of $3.25-million if it hit above-target goals. Empire says executives received only 68.2 per cent of their target bonuses.
In its management information circular, filed in July, Empire said the cybersecurity event “adversely impacted our ability to achieve the sales and profit targets” in the bonus plan. The board decided “that certain adjustments be made to remove some of the impact of this event.” Empire did not quantify the adjustment.
When contacted for comment for this story, Metro spokesperson Marie-Claude Bacon and Empire spokesperson Karen White-Boswell pointed to the discussions of the company’s compensation policies and practices in their proxy circulars.
Canada’s three major grocers close their fiscal years roughly four months apart from each other, making annual comparisons difficult. George Weston Ltd., parent of Loblaw Cos. Ltd. L-T, said in April that CEO Galen Weston’s total compensation rose more than 11 per cent, to $11.79-million, in the fiscal year ended Dec. 31, 2022.
The increase came in part because Mr. Weston, who was serving as Loblaw CEO, was spending more time at the grocer than he had in the previous fiscal year. Also, consultants hired by his family-controlled company determined that he was underpaid.