The slippery ethics of paying grocery executives bonuses

COVID-19 has made us realize that many people whose jobs are too important to be interrupted are the ones earning the least money

Sylvain CharleboisAlmost everyone agrees that grocery store workers should earn better wages, especially during a pandemic.

In Canada, their hourly rate hovers around $15 an hour. New hires get about $13 an hour, while the highest paid earn almost $50,000 annually, or about $25 an hour.

In a high-volume, low-margin world, salaries are what they are. But it’s difficult to accept such salaries when executives are pocketing near-record bonuses.

Metro announced recently that its top-paid executives shared $3.48 million in annual bonuses for the fiscal year ending in September, including $1.43 million for CEO Eric La Flèche. The bonuses represent an increase of three to five per cent from 2019. La Flèche is considered by many to be one of the best CEOs in the business and his leadership has resulted in numerous awards over the years, and even a few this year.

Even if these bonuses are likely deserved, they come in the wake of multiple employee compensation program cancellations.

During the first wave of the COVID-19 pandemic in the spring, several retailers – including Metro, Loblaws and Sobeys – offered increases to in-store and distribution centre employees. These programs ended abruptly in June.

With absenteeism a major issue in the early spring, temporary financial incentives have helped retailers retain staff. As the average Canadian grocery store has about 80 full-time employees, and payroll accounts for 30 per cent of operating costs, these programs caused stores to operate at a loss.

The math didn’t and couldn’t work for grocers and that’s the crux of the matter. “Hero pay” programs, as some called them, were never going to end well.

In addition to the bumped-up dividends awarded to shareholders this year, the bonuses paid to executives create unease. The $3.48 million given to Metro’s top five executives would have allowed the Quebec-based grocer to increase the salaries of 800 full-time employees by 10 per cent for one year.

There’s an incongruity about this that runs across the board. These employees are predominantly women, students or older people, and many must hold more than one job.

For the second wave of the pandemic, though, some grocers are providing bonuses – with a different twist. This approach better suits their financial reality by offering temporary “lockdown bonuses.” The wording suggests these programs are meant to serve a provisional purpose while recognizing the challenges of the times.

At Empire/Sobeys/IGA since November, employees earn an additional $10 to $100 a week, depending on the hours worked. The program is in force in Manitoba, the Peel Region in Ontario and Toronto. Other regions like Quebec have now joined the program.

Metro launched a “thank you gift” program for employees of stores and distribution centres: a one-time gift card redeemable in its corporate stores. Full-time employees received a $300 card, while part-time workers received $150 or less, depending on the number of hours worked per week.

There’s been no word from Loblaws yet on how it will deal with the second wave of the pandemic.

These gifts or bonuses given to employees are better than nothing. But given the pandemic and the hardships faced by many Canadians, the bonuses given to top executives at Metro are ill-timed.

Even vendors and food processors, who are being charged extra fees for doing business with Metro and other grocers, will question the morality of these bonuses.

Metro isn’t in pharmaceuticals, nor is it an automotive company. It plays a part in making our food, a necessity of life, affordable. The stakes are different.

COVID-19 has made us realize that many people whose jobs are too important to be interrupted are the ones earning the least money. These employees fully deserve bonuses.

But now is not the time to hand out $3.48 million in bonuses to five executives who work in an industry where retail prices impact the food security of many families.

In other sectors, bonuses are linked to performance. In the food industry, it’s an ethical issue.

Offering better wages calls for a different business model, with better use of analytics, the increased presence of robotization and automation. Such an approach will require specialized knowledge and talent.

How the industry slowly becomes more digital is also getting grocers to think differently about their workforce. This will mean fewer jobs, perhaps, but better paying jobs. The digital shift the sector is experiencing will also help. This is the future and wages could become less of an issue moving forward.

But excessive bonuses to executives should wait.

Dr. Sylvain Charlebois is senior director of the agri-food analytics lab and a professor in food distribution and policy at Dalhousie University.

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Sylvain Charlebois

Sylvain Charlebois

Dr. Charlebois conducts research in the broad area of food distribution, security and safety. He has written four books and many peer-reviewed and scientific articles—over 500 during his career. His research has been featured in newspapers that include The Economist, New York Times, Boston Globe, Wall Street Journal, Foreign Affairs, Globe & Mail, National Post and Toronto Star.

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