business news in context, analysis with attitude

Got a number of emails yesterday about my rant regarding the Wall Street Journal report that the bankruptcy judge overseeing the finances at Borders Group has approved a plan “to pay executives and other high-level employees more than $6 million in bonuses, after the bookseller worked to satisfy both his concerns and those of the Office of the U.S. Trustee.” According to the story, the judge said that “the amended bonus packages, which tie the $6.6 million in payments closer to the financial performance of Borders, were needed so Borders could ‘maintain its experienced work force’.”

I commented:

This is just so profoundly annoying ... because it is all about top-down management, ignoring the fact that the best ideas rise from the bottom, that success and/or failure will be determined, to a great degree, on how people on the front lines deliver on the Borders promise and value proposition.

That’s not to say that top management does not have a significant role to play. But man, this whole bonus structure sends the wrong message to the people on the front lines.

One MNB user wrote:

Unfortunately, I think this is what drives a large # of people going for a Master’s Degree, not for learning how to build a business, but for how to make the most out of it, and so what if the ‘ordinary’ people don’t make the grade……And of course, all these Bonuses have to be paid by somebody, the consumer, which does make other retailers, like Amazon, an even better option.

Capitalism at it’s worst, but I’ll still take it over anything else...

Another MNB user wrote:

I agree with you 100%.  So I suggest that all store employees stop going to work until they are paid to stay.  Eventually they will close the stores anyway, so why not get paid in the short term.

And, from another MNB user:

With that news, Borders has lost my business and I’m sure several others as this is bogus!  They would be better suited to reinvest the $6.6MM into consumer marketing events (coupons, loyalty card rewards, etc) to drive consumption and loyalty.  They fail to recognize the importance of the consumer in this equation….retention bonuses are great but the consumers are the one’s that are funding the paychecks at the end of the day!

MNB reported yesterday that Larry Wahlstrom, who returned to Supervalu-owned Shaws as CEO less than a year ago when the then-CEO, Mike Witynski, departed “to pursue other interests,” has announced that he is retiring, effective immediately. He will be succeeded by Mike Stigers, formerly of Jons Markets and PW Supermarkets on the west coast.

I commented that Shaws’ future possibly includes finding a way of getting Shaws off the books at Supervalu. There will be a lot more on this story, I suspect, as the chattering class (of which I am a proud member) starts speculating about the story behind the story.

One MNB user thinks I’m full of it:

One word on the Supervalu/Shaw's speculation.....ENOUGH.

We at Shaw's are sick of hearing your guesses.  You have been predicting the death of this company for years.

Not the death of the company. Just its sale to another entity. But I’ll have more on that in a moment.

MNB user Jim Lukens wrote:

Mike's a real bright guy, can see "the big picture" and will be able to help Shaws better and faster than his predecessors. He has both the passion and focus to turn the corner for Shaws. 

He's able to think outside the box and that's what Shaws needs.

It's not an easy task or slam dunk  for Mike but he's up to the challenge and it was a great move. 

I had a number of conversations yesterday with insiders, and the reaction to Mike Stigers’ appointment was universally positive. The general sense seems to be that Stigers brings an independent mindset to a chain that has been locked into a traditional mindset for too long.

Most people also gave Supervalu high marks for picking an “outside the box” thinker to run Shaws ... that this represents a significant move for the company.

That doesn’t mean, sources say, that Supervalu would not sell Shaws if it could get a good price for the company. That still remains a possibility. But Stigers apparently has a bit of running room here, able to make changes and invest some money in turning things around at Shaws.

So good for Supervalu. And good for Shaws. And heartfelt good luck to Mike Stigers. Because despite what some folks may think, my abiding cynicism about certain subjects and companies doesn’t mean that I want people to fail. Far from it.
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