business news in context, analysis with attitude

Well, we certainly seemed to touch a nerve yesterday with our story about
Wal-Mart Stores CEO Lee Scott earning $18.28 million in 2002, including $13.1 million in restricted stock, more than twice his 2001 pay, and Target chairman and CEO Robert J. Ulrich earning $1.4 million in salary as well as a bonus of $4.6 million in fiscal 2003.

Actually, it didn’t seem to be just the numbers that irritated people. We compounded the situation by writing that “there have been a ton of stories about top executives who are getting big pay increases despite problems with their businesses and shortcomings in their performances. In none of these critical stories, however, are the Wal-Mart and Target CEOs mentioned -- because if nothing else, these guys give their companies great value and performance.”

One MNB user wrote:

“I have not met a person nor do I know of a person that is worth $18 million per year. Executive pay has gotten as bad as sports and entertainment. Average hourly rate at Wal-Mart is what? $15 an hour? And the chief gets $18 million? Where do most of the improvement ideas come from? store employees? vendors? I think we need to invoke a salary cap.”

MNB user Andy Casey wrote:

“That's a whole lot of money. I will leave aside the question of whether they are worth that pay as perhaps that is for individual boards and shareholders to decide. But I do wonder how reports like this are received by people working in their respective stores, many of whom are just getting by these days. The store people are the ones who get squeezed to control costs, watch their overtime and if you believe some of the lawsuits being filed against Wal-Mart, pressured to work off the clock.

“It is a pretty good bet none of those folks came anywhere close to doubling their pay last year, and I doubt it is much of a morale builder for them to read the CEO did.”

Another member of the MNB community wrote:

“There have been a ton of stories about top executives being rewarded despite problems with the businesses they manage. Makes you wonder what the hell is going on in those meetings the compensation committees have and the content they present to the total board, doesn't it?”

It does.

Yet another MNB user wrote:

“Who are you kidding!!! Tell me why any one of these executives is worth that kind of money? They could never have done it without all the stockholders and the army of employees they have. The still put their pants on the same way as the stock person, cashier, or cart fetcher. What made them so lucky? How many other people could do the same or better job?”

MNB user Richard Lowe wrote:

“It is a prime example of when power and greed run away with themselves. It seems there is always a threshold that is reached and that threshold differs depending on the players and the atmosphere. This is true for politics, religion, and business. Somehow we need to get a grip on power and greed so it does not go over the cliff. I wonder what the answer to that is? How can we eliminate the innocent from being taken advantage of?”

And MNB user Randy Corkran chimed in:

“Ridiculous! No way they should earn this! Figure the rate per hour, then look at what they pay their employees.”

Okay, we get your point. Maybe instead of writing “these guys give their companies great value and performance,” we should have written “these guys seem to give their companies great value and performance.”

But we have to admit that we don’t completely agree that executives don’t deserve big salaries. Sure, we’d prefer to see that compensation be better for people at store level, but it isn’t fair to suggest that anyone could do Lee Scott’s job. And we like bonuses connected to performance, not big salaries.

That’s like saying anyone can hit a 90-mile-per-hour curveball, and therefore baseball players shouldn’t make so much money.

The fact is that not everyone can hit a curve, and not everyone can run Wal-Mart. (The Mets and Kmart are, respectively, prime examples of these facts.)

In writing about Wild Oats’ expansion plans yesterday, we wrote that “the more successful Wild Oats is, and the broader the acceptance of its marketing vision, the more attractive it may look to some major player.”

One MNB user wrote:

“Who knows...maybe this is actually their strategy?”

Our point exactly.

Regarding our writings about, MNB user David Potter wrote:

“Dear Mr. Coupe,

Mr. Bezos is correct when he says that ‘Amazon is not a normal store’; but ironically, that very fact simultaneously constrains Amazon from offering the lowest possible prices. ...To elaborate: only normal stores -- not virtual stores -- "store". Therefore, only normal stores provide a physical space where manufacturers and consumers can efficiently exchange goods without personally having to meet. To the contrary, however, and aside from a mailbox, no comparable "storage space for exchange" currently exists outside of consumers' homes. Therefore, if deliveries must be scheduled, or if the likelihood is high that deliveries will be left exposed outside a not-at-home person's locked front door, evidence suggests that the resulting lack of
security and convenience will prompt the majority of consumers "not" to order home delivered goods in the first place -- and that, in turn, decreases
delivery density, increases delivery cost, and continues to keep the variable
"last mile" portion of Amazon's fulfillment costs far higher than what they otherwise could be.”

Maybe. But we’re still ordering the Harry potter novel from Amazon, as noted above. And so will at least another quarter-million people.

And by the way, you don’t have to call us “Mr. Coupe.” “Kevin” is just fine. Or “Content Guy.” (We’re considering adopting “The C-Man” as another nom de plume…but we’re not there yet.)

MNB user Tom Brown wrote in about Ahold’s continuing troubles:

“I had a chance yesterday to chat with a retired former colleague with years of experience dealing with supermarkets.

“So I said what do you think about Ahold.

“He said that there is nothing new...companies have been playing games with supplier allowances, real estate leases, etc., forever.

“I replied that maybe all the consolidation has made them bigger targets, and, besides, the financial leveraging has made them more accountable to others.

“I wonder what your readers, and you, think.”

We think that executives have been seduced by the heroin of allowances and promotional money, and have found it easier to focus on the “buy” and not on the “sell.” We think that desperation has made these folks do the dumb and perhaps even illegal things they have done. And we believe that the “greed is good” ethos of the eighties remains current in America today, with everybody looking for the big score, the easy money, the significant payoff.

Process has become secondary to profit.

At least, that’s what we think.

Another MNB user wrote:

“White collar crime is so easy to fall into because the consequences don't follow closely on the action. Knocking off a convenience store has immediate repercussions as the perpetrator (if all's right with the world) gets a quick trip to the pokey. On the other hand the execs of the same convenience store chain (I know, Ahold is not a convenience chain but bear with me) can skim and fib in so many ways because the money takes time to move around. Consequences sure do seem to eventually come around, though.”

They sure do. That’s what Sister John Acquin used to tell us all the time in second grade. (And then she’d hit us, just to prove the point. But that’s another story…)

Regarding a new website that reportedly has been providing consumers with an instruction manual and the means to print barcode stickers so that consumers can actually reprice items in retail stores, MNB user Glen Hamilton wrote:

“Don't understand how intriguing this 'technology' is. Cutting the labels off of previously purchased low cost items, Xeroxing them onto label stock, then sticking the labels on higher priced goods has been an available technology since UPC's came into use. Barcode generation software has been available as freeware for years on the internet. has only streamlined the process of getting the low cost UPC. These idiot's still have to print out the labels and affix them to the items as they are shopping and pray to god they don't get caught doing it. Going to jail to save a dollar or two on Tide seems a bit of a stretch.”

Finally, we wrote yesterday about Yankee pitcher Roger Clemens and the terrific message about work ethics that he imparts to kids (and adults). This irritated one MNB user, who wrote:

“I read your piece about Roger Clemens with absolute horror! You, a native New Englander, describing the great betrayer as "charming." His wearing a Yankee cap even tops abandoning The Nation to join the Evil Empire and their own unique brand of checkbook baseball. Kevin, you have hit bottom.”

For the record, we live in New England. But we were born in Greenwich Village, which is a lot closer to Yankee Stadium than to Fenway Park.
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