While Canadians are often holding their breath as they approach their grocery store cash register these days, it appears our grocers’ C-Suite chains are just getting richer. Galen Weston, President and CEO of Loblaws will get a hefty raise this year, $11.7 million in salaries and bonuses, up significantly from 2021. Even though these past 12 months have been marked by historical food price inflation for consumers, the Loblaws Board felt Mr. Weston was underpaid.
Lovely timing, just lovely. Every two years, according to the company’s press release, Loblaws hires an external consultant to review salaries, making sure the chain’s compensation plan remains competitive. The consultant report underscored Mr. Weston’s noncompetitive salary and recommended a significant increase, and the Board obliged.
There are two ways of looking at this decision. From a corporate perspective, Galen Weston was indeed underpaid. The average CEO receives a salary of $14.3 million, according to the Canadian Centre for Policy Alternatives. Loblaws’ shares have also outperformed the market in recent months. Each share is now worth over $125, the highest they’ve ever been. Hard not to recognize the company’s sound financial state. Loblaws is a very well-run organization.
The fact that CEOs may be earning too much in general notwithstanding, Mr. Weston’s salary increase was well-deserved. The compensation package for Nuvei’s CEO Philip Fayer was worth more than $140 million. GFL’s Patrick Dovigi was given a package exceeding $40 million, and he’s 43. Galen Weston was the 35th best-paid CEO in Canada before this announced raise.
If you are selling tires, clothing or industrial equipment, that’s morally and socially more acceptable. Loblaws, on the other hand, is arguably more than a grocer. It’s a real estate investment fund, a bank, a pharmacy, a clothing retailer and more. But since Mr. Weston is continually on television selling food to Canadians, he is very much seen as a grocer. And that’s the problem.
There is more at stake when your business, at least partially, is about selling food, a necessity of life. From an ethical point of view, it is indeed a hard pill to swallow for many. A few days ago, the federal government purposely labelled their new, enhanced GST rebate, the “grocery rebate,” to make a point. Canadians need help, and we all need to do our part, one way or another. This announcement is plainly indicative of how out of touch the Loblaws Board really is.
When hearing of Mr. Weston’s raise, Canadians would have likely thought of two specific issues. For one, consumers will wonder how much from that can of soup or that cucumber they’re buying at a Loblaws-operated store will be going into Mr. Weston’s pocket. The other issue concerns front-line workers. Over 40,000 employees will get a pay increase, according to the release, but the company employs well over 200,000 people. It is the largest private employer in Canada. Many Loblaws employees will wonder what’s in it for them. Not great for morale.
And it’s not just Loblaws. Sobeys and Metro have also made similar decisions in the past. Boards have obligations of disclosure, of course. But Mr. Weston’s case is a little different. Loblaws’ current market capitalization is over $40.6 billion now. George Weston Limited owns 52% of Loblaws, and Galen Weston, Jr. owns 56% of George Weston Ltd. Loblaws’ market capitalization this year is making him richer, much richer. Unlike other CEOs in the field, he is from an illustrious family and from an incredibly affluent background.
In essence, the Loblaws Board should have read the room and the communications around the announcement were terribly off. Along with the announcement, the Board should have disclosed efforts to support food banks and Second Harvest, the largest food-rescuing agency in the country. Loblaws does great work to support several non-profits and food agencies. It was the right time to make these efforts better-known to the public. As for Mr. Weston’s raise, it could have quite simply waited. Or at the very least, Mr. Weston should have shown some compassion and donated some or all of his salary increase to some charities of his choice. It’s not too late. Compassion can go a long way.
People get raises all the time. Nothing wrong with that. Sometimes, organizations are just concerned about losing their talent. But in Loblaws’ case, it’s highly doubtful that Galen Weston received a competitive offer to bargain for a higher salary. It’s fair to say that he’s probably off the market.