U.S. firms shield CEO pay as pandemic hits workers, investors

U.S. firms shield CEO pay as pandemic hits workers, investors
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NEW YORK/BOSTON (Reuters) – Sonic Automotive Inc (SAH.N), which operates 95 U.S. car dealerships, started laying off and furloughing about a third of its workforce as the coronavirus pandemic crushed its sales. Then it changed its executives’ pay packages – handing them a multimillion-dollar windfall.

On April 10, Sonic’s board gave its top executives stock options to replace performance-based share awards, regulatory filings show. The options it gave Chief Executive David Smith, whose family controls the company, are now worth about $5.16 million – more than four times the value of the performance-based stock awards he got last year.

Some of Sonic’s terminated employees, meanwhile, face hard times. After a decade of buying and selling cars, Allan Nadohl, 74, said he was laid off in March and now relies on U.S. government retirement payments that don’t fully cover his bills in Los Angeles.

“Be a mensch,” Nadohl said, referring to Sonic executives with a Yiddish word meaning honorable person. “Take a 50% cut for six months.”

Sonic said in one of the filings that the changes were made in response to the pandemic, without elaborating. Neither the company nor Smith responded to requests for comment from Reuters.

Sonic is one of six U.S. companies identified in a Reuters review of regulatory filings that have moved to shield their executives’ compensation from the pandemic’s economic fallout as they laid off or furloughed workers. The others include plush toy seller Build-A-Bear Workshop Inc (BBW.N), restaurant operator Red Robin Gourmet Burgers Inc (RRGB.O), retailer Signet Jewelers Ltd (SIG.N), fashion brand DKNY owner G-III Apparel Group Ltd (GIII.O) and fracking sand producer Covia Holdings Corp (CVIA.N).

Source: Reuters

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