Published on: May 22, 2013
Yesterday, MNB posted an email from Supervalu CEO Sam Duncan in which he informed employees that the company would be reinstating a bonus program for the 2014 fiscal year, based on performance, but not merit increases or 401k matching.
This outraged one Supervalu employee, who felt that this was yet another case of top execs taking care of themselves and not the folks on the front lines. And he said that while he has been working overtime giving 110 percent to helping the company turn things around, he now feels that he would be better served by working on his resume.
I asked: How many good and hard-working Supervalu employees feel the same way?
One MNB user responded:In your piece titled Bonus Round” in your May 21st edition, you included a response by a subscriber and Supervalu employee which compelled me to take up arms… well a keyboard anyway. I too have worked for Supervalu for many years (much of that time on “the front lines”. I too work long, hard hours and log on from home... Hey… it’s a tough and demanding business). I too have a family to care and provide for. I am entitled to ZERO work-from-home days. The plea for sympathy because of 10-12 hour days (which are the norm), loss of locker room towels (uhhh… we don’t have a locker room on the “frontlines”), free coffee and paper plates (uhh… really?) and work from home days now being limited to two (which is a privilege not a right or guarantee) is nearly infuriating. And ummm… higher insurance costs?... I am also less than thrilled about that, but insurance costs have gone up nearly everywhere (particularly in our industry). It is an unfortunate fact of life. If you don’t like higher insurance costs, speak loudly with your votes. Supervalu was in dire straits, and we are not yet out of the rough waters. Regardless of a bonus announcement, having to sacrifice towels, free coffee and paper plates and suffer the indignity of only being able to work from home two days per week seems a relatively small price to pay.
Like many, I took a significant “hit” in the recent Supervalu “reorganization”. I was fortunate enough to retain my job. Full disclosure: Although my pay and bonus structure are diminished as a result, I am still a bonus eligible employee. I am not as you suggest “at the top”, nor I am particularly near the top. I am however a hard-working leader within Supervalu. I did not expect a potential bonus this year, but I made the decision to stick it out and fight for the success of my company. I did not and do not expect that to be an easy fight. I did and do expect to have to make sacrifices along the way. I am obviously excited about Sam’s announcement and Supervalu’s move to reward performance. As importantly, the announcement shows Sam’s and the Board’s commitment to aggressively pursue our common goals, and to get Supervalu back on track. Please also keep in mind that the bonus is PERFORMANCE-BASED. If we do not perform… there is no bonus. This is not a hand-out. To the commenting subscriber. With all sincerity, I wish you well in your job hunt. Please depart quickly and professionally. We neither need nor want this type of attitude within a company working hard to rebuild.
Kevin, and all contributors to our beloved MNB: Please keep up the outstanding work. I love the coverage, and I even enjoy the occasional slant and rant.
From another reader, a different perspective:I do not understand how the top management can add bonuses the week before the last of the 1100 people (laid off) are let go for “reduction of force” and not think they will be looked at as greedy and uncaring.
And another:The question is, how many good and hard-working Supervalu employees feel the same way?
A lot! Morale just took another ride to the crapper. When Sam took over he said a lot of things that sounded very down to earth and I thought the insanity was going to stop. Instead we got “play it again Sam”. It wasn’t very romantic either. What a disappointment. More of the same – “retention” bonuses (oh puhleez what fantastic work is this woman going to do for a few weeks that’s worth $300 grand), bonuses for the hierarchy, but the same old tired song and dance about “no money” for raises for the grunts who did their very best to keep the Titanic upright during the storm. Don’t be serving me PB&J while you are feasting on lobster in the board room and expect me to feel like part of the team.
And yet another:It is fine to have incentives for good managers, but stupid to not have something for employees who make it happen....and even more so to write an email that points it out!
And still another:First and foremost, as a former SUPERVALU executive, I want to thank you for your continued coverage of the company. From what I have seen inside the company, your coverage is very fair and objective. I completely agree with sentiments stated in today's MNB. 401K matches and salary increases should be re-instituted far sooner than the bonus program. Hundreds of highly qualified and talented people have left SV due to non-competitive pay and benefits among the ranks, while the executives continue to take as much from company coffers as they can with the Board of Directors fully sanctioning the activity.
I'm sure the emails will keep coming, from both sides of the issue.
I do think that it is clear that Supervalu continues to have a perception problem. A friend of mine yesterday said that one of the prime tenets of management ought to be that "the more you give, the more you get back."
Supervalu, at least among many people on the front lines, is not seen as very giving, except to the people at the top.
That's a real problem.
Regarding Apple's tax issues, we got the following email from MNB user Denis Zegar:I am usually in complete agreement with your business assessments and opinions, until now. I have to take exception to your viewpoint regarding Apple's tax policies. As a former Senate tax economist and lobbyist, I appreciate the labyrinth of IRS hurdles all businesses have to navigate. In a global economy, where price competition is unfairly tilted toward developing nations, US multinationals must take advantage of every bottom-line producing revenue source, including finding every advantage an obsolete tax code provides. Over the years business lobbyists have carved out niche provisions that afford their industry or company special consideration. The tax code has become our nation's nightmare. Like in physics, for every action there is a reaction. Apple is reacting to global and domestic actions that, if not countered, would put them at a major disadvantage.
So as an Apple shareholder I am glad that Apple is trying to protect shareholder value and retained capital. What I am not happy about is how lobbyists and money have so distorted the tax code over decades of special exceptions. This is the same tax code that enables GE not to pay any taxes, but get back tens of millions of dollars in refunds. I can't help but to be reminded what the late Sen. Russell Long, former Chairman of the Senate Finance Committee once told me about tax loopholes. "Don't tax me, don't tax him, tax the guy hiding behind the tree." In other words, your tax loophole is my salvation. Simplifying the tax code will take the proverbial act of congress. But it will also take the support of business as well. Currently, Fortune 500 companies are clamoring for a reduced corporate tax rate, but are still fighting to retain specific tax provisions (i.e., loopholes). Robert A. McDonald, P.& G.’s top executive, testified before a Congressional committee last year about the need " to cut the United States tax rate without ending tax breaks and shelters," to remain competitive in a hyper competitive global marketplace.
I think Apple is being singled out for doing what every other well run company must do -- seek to maximize bottom line profits using every legal means to do so. To do otherwise would be irrational behavior that the unforgiving marketplace would severely punish. Too much time is spent on debating marginal rates while ignoring effective tax rates. I believe Mr. McDonald and other CEO's would be willing to give up their special exemptions, if they could be assured of a corporate rate that would parallel their effective rate without all the machinations and administrative costs that goes with remaining globally competitive.
From another reader:To be clear, I am in favor of limited and smaller government, and think one of the best ways to prevent the government from overreaching is to limit taxes. Every person and entity is entitled to pay and should pay the lowest tax rate they are legally obligated to pay under the code. In addition, companies don’t really pay taxes in the bigger picture—customers pay taxes as part of the cost of doing business with companies because the tax is included in the cost of the goods or services. Could it be that Apple more effectively spent its revenue to innovate and create products and jobs than the government would have done with the funds? I am confident that I am a better steward of my income than the government is with my tax dollars.
Let me be equally clear.
First of all, in response to Denis Zegar's email, I'm glad he disagrees with me ... because nobody should agree with me all the time. But I actually think we disagree in this case less than he thinks.
I wrote yesterday that " that the real problem is a US tax code that is outmoded, unfair and in many ways, incomprehensible. (Apple seems to agree with this, by the way. It just seems to have found ways to comprehend the tax code in a way that saves it billions of dollars.)"
You're right. Apple seems to have done nothing illegal, and simply was protecting profits and its investors in ways that were entirely in line with the tax code of various countries.
Which is nothing more than some companies do by moving their companies to one state or another, and that some governors encourage by offering all sorts of benefits.
The real problem is the tax code. Denis makes an excellent argument. I refuse to accept the position that all taxes are bad, though I would agree that the tax code needs to be fairer and flatter, and that everybody should pay their fair share - no more and no less. (We can have a legitimate debate about what "fair share" means, and how the money should be used.)
But here's what I really think.
I need to move MNB out of Connecticut.
Maybe to Washington State, where there is no state income tax.
But maybe I really ought to be thinking about Ireland....