Bonuses to bosses who go badly in a context of inflation

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Bonus to bosses who do poorly in a context of inflation

Grocery chain bosses received higher bonuses last year amid inflation.

At a time when consumers are feeling the sharp rise in prices, many are questioning the bonuses paid to leaders of food chains, such as Metro, or others retail businesses.

Latest example, the grocer Metro. According to the company's proxy statement, bonuses paid to the top five executives reached $3.7 million in 2022, up 13.7% year-on-year.

The group's boss, Eric La Flèche, received a salary of $ 5.4 million in 2022, an increase of 6.8%. His bounty was 1.5 million, an increase of 15%.

For the Movement for the education and defense of shareholders (MEDAC), this increase in bonuses paid in an inflationary context can contribute to increasing the gap between large groups like Metro and customers.

Companies attach great importance to environmental criteria, but they should also attach importance to social criteria. This should be part of the remuneration policy, says Willie Gagnon, director of MEDAC.

The latter does not detail the criteria in question or their application but, according to him, grocery chains are local businesses, have an emotional connection with consumers and should therefore take this reality into account when the time comes to pay bonuses.

“We believe it is a corporate responsibility to ensure not be disconnected from society. »

— Willie Gagnon, Director of MEDAC

The organization assures that it will have discussions with Metro, which also owns the Jean Coutu and Super C banners, at the shareholders' meeting on January 24.

On is not against bonuses being tied to profits, but where does profit come from? wonders Mr. Gagnon. If the increase comes from a situation where they took advantage of inflation to increase their margins even more, it is not legitimate.

In a recent study, researchers at the Institute for Socioeconomic Research and Information (IRIS) determined that profit margins for grocery businesses (including convenience stores) increased in 2022.

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Another study from Dalhousie University found that Canada's three big grocery chains (Empire/Sobey's, Loblaw and Metro) had a higher profit in 2022 than the five-year average. recent years.

In its circular, however, Metro assures that its profit margins remained relatively stable last year. Overall, the Company's gross margin was 20%, the same level as in fiscal 2021, it says.

To explain the increase in bonuses, the company claims to have set high sales targets which held throughout the first half of the year and which were exceeded in the second half of the year, since& #x27;significant food inflation boosted sales and accelerated a consumer shift to discount stores, which was positive for our discount banners.

The year In the past, Metro reported revenues of $18.9 billion, up 3.3%, and profits of $849.5 million, up 2.9%.

Contacted by Radio-Canada, Metro points out that its compensation policy is no different from that of comparable companies.

“Our compensation is competitive and similar to that of executives of other major Canadian public companies.

— Marie-Claude Bacon, vice-president of public affairs and communications, in an email to Radio-Canada

But for MEDAC, the balance is in moderation, especially as households feel the effects of inflation and rising interest rates.

It is in the interest of the shareholders that the company preserves its reputation, that the directors are paid reasonably, that the company functions well. We don't have to worry about putting pressure on these companies to implement social criteria in their compensation policy, says Mr. Gagnon.

The United Food and Commercial Workers (UFCW), which represents employees at Metro and other major retail groups, is sorry for the rise in wages for bosses in this sector.

It is very shocking to note that the remuneration of the leaders of the most profitable companies in Canada increases substantially each year, underlined Roxanne Larouche, national representative of the union, in an email sent to Radio-Canada.

Far from targeting only Metro, the union organization says that the entire retail sector has some soul-searching to do.

In the grocery and retail sectors, executives like Couche-Tard convenience stores and Dollarama are among the top 100 highest-paid bosses in the country. However, they are the ones who oppose most strongly the improvement of the working conditions of their employees, concludes the UFCW.

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