It’s been a terrible year for Macy’s (NYSE: M). Even before the pandemic clobbered the retail industry, the department store chain already planned to shutter nearly a quarter of its stores permanently. And a few weeks back, the company announced that it was cutting another 3,900 jobs.
How did the Macy’s board punish management for this woeful underperformance? By handing them pink slips too? Not a chance.
On the contrary, the Macy’s C-suite is swimming in millions of dollars worth of bonuses.
All told, the board awarded $9 million to management , with $3.7 million going to the CEO alone.
A little back-of-the-envelope math means each terminated employee at Macy’s brought top management about $2,300.
The catch? It’s not a cash payout, but rather an equity award. Not that this makes the timing any less dubious.
There may still be one silver lining for laid-off workers. Given the uphill battle physical retail stores face in the post-pandemic world, this equity compensation could one day end up being worthless.
Macy’s shares are already down 66% over the past year.
What’s happened at Macy’s isn’t a standalone issue. A slew of companies that have underperformed this year have doled out plenty of money to executives.
Worst of all, several firms that declared bankruptcy first made sure to equip their executive teams with golden parachutes:
And those are just some of the big-name payouts at companies that have gone bankrupt, a course Macy’s may take in the near future.
The bigger question is why a board of directors would retain a CEO who ran their company into the ground.
The board is supposed to look beyond the day-to-day management , think long-term, and orient themselves towards the interests of shareholders. Bonus pay is money that could have gone to investors.
As we’ve seen time and time again this year, that hasn’t been the case. Boardrooms remain a “good ole boys” club. Boards need independent members who can speak their minds — and withhold bonus pay for poor performance.
This isn’t just the board’s problem. It’s a two-way street. Companies need CEOs who are willing to take a hit when the rest of the company struggles.
That’s clearly not the case at Macy’s. Unfortunately, it’s getting hard to find that anywhere.