An ethical CEO??? I'm truly, truly shocked.....

Is being generous good for business?
Costco CEO profits as he offers top pay, benefits
By STEVEN GREENHOUSE
New York Times

ISSAQUAH, WASH. - Jim Sinegal, the chief executive of Costco Wholesale, the nation's fifth-largest retailer, crows about Costco's private-label pinpoint cotton dress shirts.

"Look, these are just $12.99," he said while lifting a crisp blue button-down inside Costco's cavernous warehouse store here in the company's hometown. "At Nordstrom or Macy's, this is a $45, $50 shirt."

Combining high quality with stunningly low prices, the shirts appeal to upscale customers — and epitomize why some retail analysts say Sinegal just might be America's shrewdest merchant since Sam Walton, the founder of Wal-Mart.

But not everyone is happy with Costco's business strategy. Some Wall Street analysts assert that Sinegal is overly generous not only to Costco's customers but to its workers as well.

Costco's average pay, for example, is $17 an hour, 42 percent higher than its fiercest rival, Wal-Mart's Sam's Club. And Costco's health plan makes those at many other retailers look Scroogish. One analyst, Bill Dreher of Deutsche Bank, complained last year that at Costco "it's better to be an employee or a customer than a shareholder."

Sinegal begs to differ. He rejects Wall Street's assumption that to succeed in discount retailing, companies must pay poorly and skimp on benefits, or must ratchet up prices to meet Wall Street's profit demands.

Good wages and benefits are why Costco has extremely low rates of turnover and theft by employees, he said. And Costco's customers, who are more affluent than other warehouse store shoppers, stay loyal because they like the fact that low prices do not come at the workers' expense.

"This is not altruistic," he said. "This is good business."

He also dismisses calls to increase Costco's product markups. Sinegal, who has been in the retailing business for more than a half-century, said that heeding Wall Street's advice to raise some prices would bring Costco's downfall.

"When I started, Sears, Roebuck was the Costco of the country, but they allowed someone else to come in under them," he said. "We don't want to be one of the casualties."

At Costco, one of Sinegal's cardinal rules is that no branded item can be marked up by more than 14 percent, and no private-label item by more than 15 percent. In contrast, supermarkets generally mark up merchandise by 25 percent, and department stores by 50 percent or more.

"They could probably get more money for a lot of items they sell," said Ed Weller, a retailing analyst at ThinkEquity.

But Sinegal warned that if Costco increased markups to 16 percent or 18 percent, the company might slip down a dangerous slope and lose discipline in minimizing costs and prices.

Sinegal, whose father was a coal miner and steelworker, gave a simple explanation.

"On Wall Street, they're in the business of making money between now and next Thursday," he said. "I don't say that with any bitterness, but we can't take that view. We want to build a company that will still be here 50 and 60 years from now."

If shareholders mind Sinegal's philosophy, it is not obvious: Costco's stock price has risen more than 10 percent in the last 12 months, while Wal-Mart's has slipped 5 percent.

Emme Kozloff, an analyst at Sanford C. Bernstein & Co., faulted Sinegal as being too generous to employees, noting that when analysts complained that Costco's workers were paying just 4 percent toward their health costs, he raised that percentage only to 8 percent, when the retail average is 25 percent.

"He has been too benevolent," she said. "He's right that a happy employee is a productive long-term employee, but he could force employees to pick up a little more of the burden."

Sinegal says he listens to analysts' advice because it enforces a healthy discipline, but he has largely shunned pressure to be less generous to workers.

"When Jim talks to us about setting wages and benefits, he doesn't want us to be better than everyone else, he wants us to be demonstrably better," said John Matthews, Costco's senior vice president for human resources.

Costco was founded with a single store in Seattle in 1983; it now has 457 stores, including two in the Houston area. Despite Costco's impressive record, 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 American companies.

"I've been very well rewarded," said Sinegal, 69, 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."

AngryWoofDog Howls:

This dude actually.... well.... he rocks. This is the only store that I shop when I'm in Chicago, and I'm damn proud that they are doing the right thing for the employees and not bowing down to corporate analyist pressure to "burden" the employees any more than they already are. Shit fire! Someone that gives a damn. This makes the AngryWoofDog's day :)

Shell Oil, Canada, Alternative Energies, and You....

Just when we thought that Canada might be our salvation, we begin to learn that they are as much as the mercy of corporate interests as we are here in amerika.... stupid shit is happening all over the planet.

Yesterday, as I was driving home, it had just stopped raining. I looked up in the sky at the clouds and they were a very angry red. In fact, a reddish-purple pallor was cast upon everything in sight. Folks, this ain't normal. It's pollution. And it's killing you and it's killing me and it's killing everything else on the planet. We need to change our ways and very fast. But shit like the following story makes me lose hope....


NCC sorry for nixing Corn Cob Bob from Canada Day
Last updated Jul 5 2005 09:00 AM EDT
CBC News

CBC NEWS – The National Capital Commission has apologized for banning an alternative-fuel mascot from its Canada Day celebrations at the request of a major oil company.

Corn Cob Bob is the front man for the Canadian Renewable Fuels Association, a not-for-profit group that promotes clean energy.

The association had secured an information booth at Major's Hill Park through the NCC, which had even offered a 50-per-cent discount on the usual fees.

But last Wednesday, the commission called to cancel the arrangement after pressure from Shell Canada, a key sponsor for the Canada Day celebrations in the capital.

Kory Teneycke, the executive director of Canadian Renewable Fuel Association, was surprised by the call.

"They said they were very sorry but they said one of their major sponsors had indicated there was a conflict between the message that we were promoting and their company's interests," he said.

Teneycke says the NCC shouldn't be in the business of caving into corporate pressures and curbing free speech.

NCC spokesperson Guy Laflamme says the decision to cancel Corn Cob Bob was not approved by senior management.

"We will make sure this doesn't happen in the future. But once again, we are committed to promoting alternative sources of energy," said Laflamme.

The NCC called Monday afternoon to apologize to the Canadian Renewable Fuels Association, and invited the group to attend next year's Canada Day celebrations.

A Shell spokesperson said the company's arrangement with organizers meant it had exclusive rights when it came to fuel products.

Shell produces more than three per cent of the world's oil and gas. On its website's Environment and Society page, the company states, "We have an essential role in finding new ways to meet present and future energy needs in environmentally and socially responsible ways."