Total compensation increased after outside consultants determined it was too low
Galen Weston was paid $8.4 million for running Loblaws last year, an increase from the previous year's level after management consultants determined he was underpaid.
Regulatory filings for Loblaw Cos Ltd. show that Weston, the scion of one of Canada's richest families, took in just over $8.4 million in salary, bonuses and stock-based compensation last year as president and chairman of Loblaws, the grocery chain his family controls.
That's up from the just over $5.4 million in total compensation he got from the company in 2021. The year before, in 2020, Weston earned $3,549,591 in total compensation from Loblaws.
Catherine Thomas, a spokesperson of Loblaw Cos. Ltd., says it's misleading to characterize his compensation plan as a raise, since he only took over the title of president and chairman in May of 2021. Prior to that, he was executive chairman of Loblaws.
"The increase from 2021 to 2022 reflects the fact that in 2021 he transitioned back to Loblaw full-time mid-year," she told CBC News in an email.
Weston also earns compensation from his role as chairman and CEO of George Weston Ltd., the holding company that controls most of the family's wealth via voting control of Loblaws, the real estate arm, Choice Properties, and other assets. His total compensation across both companies is based on a complex formula that sees 70 per cent of his compensation come from Loblaws and 30 per cent from Weston.
Weston's compensation bump was first reported by The Globe and Mail, which noted that when his compensation from George Weston Ltd. is included, his total compensation across both companies was nearly $11.8 million — an increase of $1.2 million from 2021's total.
His base salary across both companies — which impacts the amount of his bonuses since they are expressed as a percentage of his salary — rose from $1,242,000 in 2021 to $1,350,000 in 2022.
While it is the Weston company that bears his name, it is Galen Weston's status as head of Canada's largest domestic grocery chain, Loblaws, that has earned him and the company the ire of consumers this year, as families struggle to pay ballooning grocery bills that have grown by more than 10 per cent in the past year.
Weston was among numerous executives grilled by lawmakers at a parliamentary subcommittee last month, probing the high cost of food. "It doesn't go to me," Weston said of the company's profits, which hit a record high of just over $1.9 billion last year. "It goes back into this country."
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At a committee hearing in Ottawa this week the heads of Loblaw, Metro and Empire Foods faced tough questions from parliamentarians about why food prices continue to skyrocket. All three pushed back forcefully against allegations they are profiteering from high inflation.
Weston's compensation increased last year partly on the recommendation of Meridian Compensation Partners, an outside consultancy hired by the grocery chain in 2020 to make sure Loblaws' executive compensation plans were within acceptable benchmarks.
Meridian was paid $122,806 in 2022 and $118,574 in 2021, Loblaws says, to review the company's executive compensation policies.
'Below the market median'
That review found that most of the company's upper management was being paid in line with internal targets and external benchmarks, but Weston himself was not.
"The results of the 2022 review provided that Mr. Weston's total direct compensation was below the market median and Loblaw's compensation policy objective," the company's management proxy circular for last year said.
As president of the company, Weston earned a base salary of $907,200, but also nets numerous types of stock-based compensation. The company's short-term incentive plan was recently increased so that he can get up to 160 per cent of his base salary, while the long-term incentive program was upped to 560 per cent. Both ratios are higher than those for any other executive at the company.
Other executives at the company also saw their compensation increase, even as that review found that the formulas for compensation were within acceptable ranges. Chief financial officer Richard Dufresne saw his total compensation go from just over $1.8 million in 2021 to more than $5.4 million last year.
And chief operating officer Robert Sawyer's total compensation rose from $7.4 million in 2021 to just over $9.3 million last year — more than Weston himself.
Thomas says that executives and board members weren't the only ones who got pay bumps this year, as many rank-and-file employees also got performance-based bonuses.
"Our bonus program is established to reward company and personal performance, and it is not unique to executives. This year, 40,000 Loblaw colleagues received a bonus," she said.
In addition to his duties as president, Weston is also chairman of the company's board. He is one of the only members of the board who received no compensation for board duties last year. He's also the only member of the upper management team not entitled to any sort of severance should he be terminated from his role as president, and he is the only member of upper management not entitled to a pension.
Similar trend elsewhere
While Loblaws has become the main focus of consumer ire in the current era of food inflation, executive compensation plans at other grocers are in line with those at Loblaws and also headed in the same direction: up.
Eric La Flèche, the CEO of grocery chain Metro Inc., took in $5.3 million in total compensation last year, according to the Montreal-based company's management proxy circular. That's up from $5,018,907 the year before.
Michael Medline, the CEO of Halifax-based Empire Company — which owns Sobey's, Safeway, FreshCo, Foodland and other grocery brands — took in $8,651,285 in total compensation last year. That was an increase from just over $7.4 million the year before, but actually down from the more than $13 million earned in 2020, when he was granted more than $8 million in stock options alone.
Ian Lee, an associate professor in the Sprott School of Business at Carleton University in Ottawa, says that focus on executive compensation is misguided, because it is subject to the same rules of supply and demand that govern any market.
"Whether it's entertainers, musicians, athletes, or CEOs, there is a supply and a demand, and you pay the market price or you lose them," he told CBC News in an interview.
While he acknowledges that there's little risk of Weston leaving the family-owned company, any other executive in his role would be paid a similar amount.
"We can brow beat people by embarrassing them but all we're doing is setting up conditions that say Canada is not a good place to invest in because the political people will will beat you up if you make a lot of money," Lee said.
Lee says Weston has become the target of so much ire not only because of his wealth — pegged at more than $9 billion by U.S. financial magazine Forbes — but because he is very much the face of the Loblaws brand, appearing in a series of Loblaws ad campaigns.
"It's one thing to have him as the CEO of the company … it's another thing to put them into the operational advertising of the company," he said. "It would probably be strategically prudent to de-emphasize someone like him, because he has become a lightning rod for criticism."
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