Three Companies That Bent The Rules For Their Top Employees in 2020

Posted: June 8, 2021

2020 represented one of the strangest years for business that the world has ever seen. Some companies thrived while others nearly went bankrupt and it depended almost entirely on how their business model aligned with the pandemic. Extraordinary times definitely call for extraordinary leadership and there is nothing wrong with compensating that leadership appropriately. However, in hindsight, it seems like a few companies were determined to funnel bonuses to their top executives almost regardless of what happened. Let’s take a look at three companies that bent the rules for their CEO in 2020. Foot Locker Foot Locker actually tweaked their own rules twice to help protect executive compensation. In years past, the company generally decided on executive bonus metrics in March to give top employees clear direction on what goals needed to be reached to receive the full scope of compensation. In 2020, Foot Locker’s board delayed setting these metrics until June (a few months after the pandemic was underway) so that executive compensation milestones could be more easily achieved in light of the pandemic. For example, if the original goal was going to be to grow revenue by 3% year-over-year, similar goals set in 2020 were geared more towards preventing a revenue decrease of more than 30%. This might sound fair until you consider that Foot Locker furloughed almost all of its employees without pay, starting two months before executive metrics were even set. Then, when the earnings from the pandemic were released, Foot Locker decided to add an additional $303 million in total sales to their financial sheets that were not truly realized. They stated that these sales were an “estimate” of what they would have made if it were not for the public health crisis and widespread racial equality protests that characterized 2020 in the United States. After adding $303 million in unrealized sales, their total revenue was only down 3% from 2020, which helped their CEO meet his 2020 metrics and take home about $12 million in total compensation (a 30% bump from 2019). Advance Auto Parts Similar to Foot Locker, AAP’s CEO Tom Greco’s compensation is tied to meeting specific metrics. When the scope of the pandemic fully sank in, it resulted in a number of unexpected costs such as extended sick-pay benefits and expenses for hand sanitizer and other safety equipment. These expenses totaled $60 million and dragged down two key measurements that Greco was supposed to be compensated on. Luckily, the board’s compensation committee saw these costs as “extraordinary and unanticipated” so they decided to exclude them from their calculations. In the end, Greco ended up receiving $8.1 million, 4.7% more than last year. It’s worth noting that the pandemic was also “extraordinary and unanticipated” for 475 of the company’s employees who were laid off to save money. Carnival Cruiselines During the global pandemic, travel and recreation related businesses suffered far worse than many other US companies. Therefore, it should be no surprise that Carnival Cruises had an incredibly difficult 2020. Carnival swung a $10 billion loss and had to take drastic cost-saving measures to stay afloat (financially, that is). They laid off about 2,000 employees total in California and Florida and even announced that they were cutting their CEO’s salary by 50%. Difficult and unprecedented times made this seem like a clear and straightforward temporary adjustment. However, while they did cut his salary, his total compensation package wasn’t revealed until later on in the year. It soon became clear that their CEO actually made more in 2020 than he did in 2019 by about $2 million, since he was awarded over $12 million in stock awards. To learn more about maximizing executive compensation, visit our Contact Page, or contact us directly by email at or by phone at 415-618-6060.