An underpaid CEO? How radical!

Jim SinegalIn my last post I wrote about how Costco treats its employees better than their competitors, get huge profits as a result – and catch flack for it from stock analysts who want them to spend less money on their people. Go figure.

So here’s a good question… considering that Costco spends 40% more on their employees than their closest competition, how well is Costco CEO Sinegal himself paid?

Despite Costco’s impressive record, Mr. Sinegal’s salary is just $350,000, although he also received a $200,000 bonus last year. That puts him at less than 10 percent of many other chief executives, though Costco ranks 29th in revenue among all American companies.

“I’ve been very well rewarded,” said Mr. Sinegal, who is worth more than $150 million thanks to his Costco stock holdings. “I just think that if you’re going to try to run an organization that’s very cost-conscious, then you can’t have those disparities. Having an individual who is making 100 or 200 or 300 times more than the average person working on the floor is wrong.”

So here’s a company that pays its employees more than average – and its CEO waaaay less. I like it!

This also contributes to making people happy at work. While I always say that money can’t make us happy at work, a salary that’s too low or blatantly unfair (say one that is 200 times smaller than the CEO’s) can definitely make us unhappy.

8 thoughts on “An underpaid CEO? How radical!”

  1. You also have to wonder how much he is getting in stock options and other compensations. I remember hearing about one CEO that was only receiving a salary of $1 because the rest (and there was alot) was all in stock options and benefits.

  2. Alex,

    I’ve had business dealings with Costco. My experience is that, unlike WalMart and the “WalMart Trend” companies, Costco also treats their vendors well. That doesn’t mean that they aren’t cost conscious. It means that they treat people with dignity.

    As for the salary issue: even if Mr. Sinegal is getting stock options–a norm for many executives as well as employees in large companies–he can’t get multiply his wealth unless the company performs. Most CEO’s I know get a hundred times the salary of the lowest employee PLUS the stock options.

    Thanks for making an example of what appears to be a good example.

  3. Steve Jobs, the Google Boys, and Yahoo’s CEO are all at the $1 annual pay… Yet we all know ‘somehow’ they seem to be doing a little better than all of us combined!

    Article on Boston.com about $1 CEO Salary’s ->Read More…

  4. I agree. I think I remember hearing about the $1 CEO. Maybe Costo should stop treating their employees so well and maybe the CEO will earn as much money at the WallMart clowns.

  5. Jason: Yeah – I know – The guy probably isn’t poor. But as Steve says, other CEOs are being paid millions in salary PLUS stock options, meaning they’re grossly overpaid even when their companies tank.

    Steve: I’m glad to hear it. I always think that next after treating your employees and your customers right, a company should be good to its suppliers.

    Dana: Thanks for the link – I like the $1 option :o)

    Grayson & Joe: Exactly!

  6. As long as he’s happy with job and satisfied with his salary, I don’t think it’s a big deal. It’s like a bonus he is giving to all the employees at the cost of his salary.

  7. We can’t blame him for being satisfied with an underpaid job. It’s clear that his interest is happiness at work which Costco is sufficiently providing him.

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