Steve Cain and the new bonus scheme for Coles Myer’s senior managers.
Steve Cain is a highly paid and high flying Coles Myer executive, but does he understand issues like equity and fairness in the rewarding of effort in the businesses he oversees?
Some would say not about the scrapping of a bonus trial scheme, but more of that later. First, some background on Steve.
He’s in charge of the group’s key business, the Food and Liquor operations centered on Coles and Bi-Lo supermarkets, the Liquorland, Theo’s and Vintage Cellars liquor businesses.
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He oversees $23 billion a year in sales and earnings before interest and tax of around $700 million.
That’s why he’s the second most highly paid executive in the company outside the CEO Big John Fletcher (Myer Megamart boss Dawn Robertson is the most highly paid female non CEO in the country).
Steve, an English chap with a good retailing background, received just over $3.7 million in cash, bonus, options, superannuation and other payments in the 2004 financial year.
A lot of money and certainly a lot more than the comparable executive at industry leader Woolworths where the head of supermarket received around $1.25 million (Tom Flood, who has retired) despite running a larger and more profitable business.
So Steve’s the king of the checkout chicks at Coles. A high flier and one not averse to building on the work of others, or the forced absence of others to enhance his upward progress.
He’s closed Liquorland’s Sydney headquarters and re-located it to Melbourne at a cost of some jobs and around $17 million.
The head offices of Coles Supermarkets and Bi-Lo in Melbourne have also been amalgamated, at a cost of some jobs, but the exact number were not quantified at last week’s Coles AGM.
That why an insider at Coles has posed the question; can 3,000 Coles and Bi-Lo executives fit into 1800 jobs?
Good question, and obviously the answer is, only with great difficulties and lots of bodies left lying around.
So after that miracle has been tried, how many of those non complying executives will be ‘let go’ to help Steve and the other managers achieve their targets for the new Coles Myer share bonus scheme for the 220 most senior executives in the company, all except “big” John Fletcher?
Here are details of the new incentive scheme – Senior Executive Performance Share Plan
Around two million shares will be issued, that’s worth more than $19 million at current prices. Nice for some.
There was some discussion at last week’s annual meeting, reported as follows in The Age – Coles pins hopes on wave theory – and The Australian – Investors shrug off Coles trifecta – but there are a few questions still being posed about the generosity and equity of this scheme.
For example the hundreds of department managers in the Coles Victorian Supermarkets division covering over 110 Victorian stores, they were told last month that their annual performance bonus had been scrapped! The situation in other states is not known.
Although rival Woolworths/Safeway department managers have had a bonus scheme for years, Coles had only been trailing their bonus scheme for department managers for the past 2 years.
These are the people earning between $30,000 – $40,000 and had been waiting for a bonus for years. Although only worth around a $1,000 a year or so, it was appreciated by those receiving it, especially after their important part in doubling earnings from Coles’ most important business the supermarkets, between 1999 and this year. The especially applies in the Victorian supermarkets which is Coles’ most important state.
But why scrap this bonus, with no news of any replacement, and bring in a new scheme for the 220 senior managers, including the likes of Steve Cain?
After all these senior executives will have earned their bonus shares thanks to the efforts of those now being denied a bonus.
Is it that old story of business, one rule for us and nothing for the workers?