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A Canadian Tire associate brings bags of items to a curbside pick up customer at Canadian Tire store in Toronto on Feb. 17, 2021.Fred Lum/The Globe and Mail

Two retailers who saw COVID-19 boost sales yet dent their profits paid out annual bonuses near or above their targets, bringing millions to their top executives.

Canadian Tire Corp. Ltd. and Loblaw Cos. Ltd. both blew through revenue goals, but missed their targets on profits. Yet they took two slightly different approaches when it came time to write the annual bonus cheques: Loblaw’s board chose to scale back the benefits to its executives from the sales boom, while Canadian Tire allowed its plan to pay out maximums for the COVID-19-boosted revenue.

Both Loblaw and Canadian Tire benefited from a surge in demand for their products during the pandemic. However, profits lagged sales increases. Retailers across the country shouldered higher expenses in 2020 owing to COVID-19-related cleaning and safety protocols. Some retailers, including Loblaw and Canadian Tire, paid out temporary bonuses to store employees.

Canadian Tire chief executive Greg Hicks – appointed to the job March 12 – made $4.49-million, including $932,596 in salary, $2.5-million in share and option awards, and a $949,224 bonus.

His predecessor, Stephen Wetmore, made $9.69-million in 2019, his final full year as CEO. Mr. Wetmore, who stepped down from his job and the company’s board in March, made $8.40-million in 2020. The company said he continued to be paid through Dec. 31, and was awarded a $2.10-million bonus.

The total included a long-term incentive stock grant of $4.50-million. Canadian Tire paid out most of Mr. Wetmore’s long-term incentive stock awards, accumulated over multiple years, at the end of 2020. The company estimates the stock was worth $21.95-million on his last day, and says it cashed him out “subsequent to the fiscal year-end.”

Canadian Tire and Loblaw, like most large Canadian companies, have a multifactor bonus program that first sets a target amount of bonus, lays out goals and then calculates a performance factor that determines just how much of a target bonus gets paid out.

Canadian Tire said it paid out bonuses at 107.9 per cent of target. Its sales-growth figure of 9.5 per cent, which is weighted at 25 per cent of the plan, blew through its target of 4.29 per cent. So the company paid out the maximum 200 per cent versus target the plan allows.

Canadian Tire missed its earnings goal of $813.1-million by 2.8 per cent, however, with profits of $790.3-million. The company paid out at 77.2 per cent of the goal.

All told, Canadian Tire paid out annual bonuses at 107.9 per cent of its target. “In spite of COVID-19 impacts to the business, [the company] achieved outstanding operational and financial results” in 2020, the company said in its proxy circular to shareholders. It noted it did not revise its incentive-plan goals, instead scoring itself against prepandemic targets.

Loblaw says that in February, 2021, the board’s governance committee looked at the company’s COVID-influenced 2020 results and 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 allows for.

That put the brake on extra bonus pay for Loblaw’s outsized revenue results. Loblaw set a goal for consolidated sales of $48.705-billion, but recorded sales of $50.847-billion. On the other hand, Loblaw missed its earnings target of $3.602-billion by 4 per cent, putting up $3.457-billion in profits instead. So the company paid out zero for that particular goal.

According to the Loblaw proxy, the board’s governance committee determined the increase in sales was “partly related to more customers cooking and eating at home as a result of the COVID-19 pandemic.” The earnings miss, however, “was driven by increased costs to ensure the safety and security of customers and colleagues during the COVID-19 pandemic and incremental e-commerce labour costs as a result of higher online sales.”

All told, Loblaw paid out at 90 per cent of the targets for its annual bonus plan. In 2019, Loblaw paid out at 106.2 per cent.

Loblaw executive chairman Galen G. Weston made $3.55-million, down from $3.67 million in 2019. His pay package included a salary of $480,000 and $2.4-million in share and option awards. His annual bonus of $648,000 was lower than 2019′s annual incentive of $764,640.

President Sarah Davis, who is slated to retire from the company in May, made $4.53-million, including a $1-million salary, $4-million in stock awards, and a $1.35-million bonus, down from $1.59-million in 2019.

Loblaw says Ms. Davis will receive “certain payments” for the remainder of 2021. Loblaw stock given to her under the company’s long-term incentive plan – other than shares granted in 2021 – will continue to vest, Loblaw said.

With a report from Susan Krashinsky Robertson

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