Per Bank Made Bank: Loblaw CEO Made A Hefty $22 Million Amid Boycott Calls
Loblaw Companies (TSX: L) has faced scrutiny after it disclosed the hefty compensation package of its new chief executive, Per Bank, totaling $22.1 million for the year 2023. Bank, who assumed the role on November 1st, received a one-time $18 million award to replace forfeited compensation from his former employer, Denmark-based retailer Salling Group.
The package breakdown revealed Bank’s $1.315 million annual salary, a target annual bonus of nearly $2 million, and a target of $7.2 million in annual long-term incentives for the current year. Despite his brief tenure, Bank received approximately $3.75 million for his first 60 days on the job, alongside additional benefits including rent coverage and tax equalization payments.
Loblaw justified Bank’s compensation, stating that “without this make whole compensation, Loblaw would not have been able to persuade Mr. Bank to leave his former employer.” Meridian Compensation Partners, a consulting company, reviewed Bank’s proposed compensation and deemed it reasonable, considering it was below median market rates.
Galen Weston, Loblaw’s former CEO and current non-executive chairman, saw a slight decrease in his compensation, earning $8.01 million directly from Loblaw in 2023.
The company’s performance, while exceeding internal targets, faced public backlash over high food prices. Bank pledged to negotiate harder with suppliers to alleviate price increases and introduced initiatives such as “Hit of the Month” promotions.
Criticism towards Loblaw intensified following controversies like the cancellation of food discounts and calls for boycotts on social media. However, the company’s performance remained strong, with net earnings increasing by 9.4% and revenue growing by 5.4% in 2023.
However, executive bonuses saw a decrease in 2023, signaling a year where Loblaw’s performance surpassed internal targets but with a narrower margin compared to the previous year. The company’s short-term bonus plan payout factor was 130% of the target in 2023, contrasting with nearly 180% of the target in 2022.
“Loblaws Is Out of Control”
The hefty compensation comes amid a popular Reddit forum spearheading a boycott campaign against Loblaw and its affiliated businesses scheduled for May. The forum, named “Loblaws Is Out of Control” which was originally created for Canadians to vent about soaring grocery costs, has gained substantial momentum, drawing attention to the increasing financial strain faced by Canadian consumers.
With over 35,000 members as of the past weekend, the subreddit’s moderators are leveraging the platform to orchestrate a month-long boycott aimed at pressuring Loblaw to reduce prices. Frustrations over inflated costs for everyday items, such as a $16 watermelon or a $21 stick of deodorant, have fueled the call to action.
Emily Johnson, the forum’s creator, noted that discussions intensified following Loblaw’s decision to eliminate its 50-percent off quick-sale section earlier this year, a move that was later reversed due to public outcry. Recognizing the need for collective action, the moderation team opted to organize the boycott.
“A lot of natural conversations started to spring up about how we as a group need to do more and make our cause known to the people in charge (at Loblaw),” said Johnson. “As our moderation team, we felt it would be best if we organized that boycott.”
The boycott organizers are demanding a 15-percent price reduction and the removal of “member-only” pricing schemes, which require customers to enroll in loyalty programs for discounted rates. Redditors highlighted disparities, such as a pack of toilet paper priced at $4 for members but $12 for non-members.
To encourage participation beyond abstaining from shopping at Loblaw-owned stores, organizers suggest contacting Members of Parliament and Loblaw’s customer service to express concerns. They also advocate for strategic shopping tactics, like using loyalty points and purchasing only loss leader items.
Matthew Rozak, a Toronto university student, took proactive measures by organizing a protest outside a Loblaws store, despite encountering unexpected weather challenges.
“I would like to see Canada adopt food waste laws similar to France where soon to be expired food is donated to food banks or made free, and grocery stores are fined for throwing away products,” said Rozak.
In response to queries, Loblaw’s Chief Financial Officer, Richard Dufresne, highlighted recent data indicating a 2.4-percent food inflation rate, the lowest since July 2021. Dufresne expressed optimism for further moderation in food prices, offering some relief to consumers grappling with the cost of living.
“For Canadians who continue to face extraordinarily higher costs of living, this is good news, and signs point to continued moderation in future months,” he said.
Loblaw Companies last traded at $150.52 on the TSX.
Information for this briefing was found via The Globe And Mail, Yahoo News, and the sources mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
