Metro Inc. paid out near-maximum bonuses to its top executives, saying that while the COVID-19 pandemic indeed fuelled a rise in sales in the past year, the supermarket chain was well on its way to topping its profit targets anyway.
The top five best-paid Metro executives received a combined total of $3.48-million in annual bonuses for the fiscal year the company completed on Sept. 26, including $1.43-million for chief executive Eric La Flèche. The bonuses were 3 per cent to 5-per-cent higher than the prior year.
The Quebec-based grocer is the first major Canadian company that experienced a COVID-19-related boom to report on its pandemic executive-compensation decisions.
Metro’s executive compensation discussion revealed it blew past its profit goals: Its bonus plans had a target of $755-million in profits, and the maximum it anticipated was $778-million. Metro instead reported $823-million in profits when it finally closed the books.
While a portion of the performance “was fuelled by the additional sales resulting from the pandemic,” the company said in its proxy circular, the board’s compensation committee recommended the earnings-based portion of the bonuses be paid at the maximum amounts.
Metro “was well on its way to meet or exceed budgetary targets prior to the pandemic,” the company said, and, “most importantly,” the board determined Metro’s “management of the pandemic crisis was excellent, in terms of employee and customer safety, community support, as well as in terms of superior relative financial performance, driven by market share gains and strong operating leverage.”
The topic of bonuses has been contentious in the grocery industry this year, as Canada’s largest retailers in the sector granted – and then rolled back – temporary pay boosts to front-line workers during the hectic early months of the COVID-19 crisis. Metro and competitors Loblaw Cos. Ltd. and Sobeys owner Empire Company Ltd. were called before a parliamentary committee in July to explain their decisions to cut staff bonuses, which were all announced on June 11 and 12.
Recently, as coronavirus case numbers have begun to climb again and lockdown measures have intensified, some of the grocers have reinstated those bonuses.
Empire’s new pandemic pay – an extra $10 to $100 a week, depending on hours worked – took effect on Nov. 12 in Manitoba, and in Ontario’s Peel Region and Toronto on Nov. 23.
Empire has since expanded the bonuses to Quebec and to other areas of Ontario that are under lockdown, such as Hamilton. The company expects to do the same for most Ontario regions as the Ford government expands lockdowns this week, and has said it would expand the bonuses to any other regions where government-mandated lockdowns are introduced.
Loblaw did not respond to questions about whether it is reinstating bonuses for front-line workers.
On Nov. 26, Metro announced a one-time “thank you gift” to store and distribution-centre employees in the form of a gift card redeemable at Metro-owned stores. Full-time employees received $300; part-time employees working 15 hours a week on average were given $150, and other part-time employees working fewer hours received $75.
Grocery sales have surged this year as public-health authorities have urged Canadians to stay home and, in many areas, have closed restaurants, leading to more people cooking at home. Last month, Metro reported a 7.3-per-cent growth in sales for the year ended Sept. 26, to nearly $18-billion.
Grocers have also reported millions in added costs related to safety measures in stores. Winter presents new challenges as stores continue to impose capacity limits; Metro executives have been looking at putting up shelters outside some stores where there are lineups.
A handful of companies whose fiscal years closed in August or September are reporting those pandemic-related compensation decisions now. But most of the remaining major Canadian corporations close their books on or near Dec. 31, and the bonus discussion comes early in 2021.
“Boards are all wrestling with this now because this is the season,” said Christopher Chen of Compensation Governance Partners.
“They’re going to have tough decisions to make in terms of what to pay their executives. Some organizations, they’re really doing well, and they’ve got some front-line workers who are showing up every single day. What kind of bonus are you going to give your executives? Your numbers say pay the executives the max. How does that look this year? Is that optically the right thing?”
All told, Mr. La Flèche made $5.07-million, up from $4.96-million in the prior year. His compensation package included $1-million in salary and stock options and share awards valued at nearly $2.2-million.
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