Executive Compensation and Wage Policy. The Interesting Case of Whole Foods Market !

I guess I already mentioned it, but one of the reason I very much like Whole Foods Market as an investing target, is the sound and reasonable wage policy they have.

In a world (and not only in the US), where we often see outrageous exageration by top executives, here's the philosophy at WFMI :

- First of all, once a year, the entire compensation at everyone at Whole Foods is available for everyone to read, deciding in their own minds whether the compensation is fair and just.

- The 6 top executives of the management team all have exactly the same salary, around 450K$. Those kind of rates are very significantly below peers' levels. Here's what Walter Robb, co-fonder, has to say about that : "do we make less than executives at other companies our size ? Absolutely, but how much money is enough ?". And John Mackey to add : "I think that a lot of executives in corporate America are basically harming the cultures of their organizations by taking too great a compensation."

- No one in the company, including the executive team, makes more than 14 times the average wage rate !

- 93% of the Stock Options are distributed outside the executive team. The ownership of the company has been widely distributed !

Bottom line is that the employee turn-over is minimal and significantly below other retailers, and that no major executive leader has ever been lost to another company !

A company is a bunch of people working together towards a common objective. Such policies do strongly cement the community and fellow workers have a strong incentive to be 100% motivated about the company project.

Comments

[David]

This is indeed a clever policy.
May I invite you readers to take a look at this paper from Daniel Cohen in Le Monde dated Wednesday:
www.lemonde.fr/web/article/0,1-0@2-3232,36-809599,0.html
Daniel Cohen could have used your post to further illustrate what he is demonstrating : there is no economical justification (company financials, stock performance...) to stratospheric CEOs wages.
These wages are the result of a self sustained system which gives the perception that a good manager in a large coporation is a scarce ressource. MIT research tried to demonstrate this is not true.