Rite Aid’s expensive changing of the guard…
One of the more popular posts we’ve done here at footnoted — at least in terms of reader comments — was this one from two years ago on the lack of adequate products at a Rite Aid (RAD) store in Manhattan. Even after all this time, Rite Aid employees still write in to grouse about the company.
We thought about this post the other day after reading this press release that Rite Aid put out last week. In the release, the company noted that Chairman and CEO Mary Sammons, who was hired in December 1999 after the debacle that WSJ reporters Mark Maremont and Robert Berner brought to light eleven years ago, would be stepping down as CEO on June 24. As the release notes, Sammons is making room — succession planning in corporate speak — for former Rite Aid CFO (and current president and COO) John Standley, who returned to the company in September 2008.
What the release didn’t point out, but which was included in the 8-K that the company filed yesterday, were some of the financial details of the transition. Sammons, who will remain Chairman of Rite Aid through June 2012, will continue to collect the CEO salary of $1 million a year through next June plus any bonus/incentives. After that, her salary will drop to $350K, unless she winds up leaving before the end of the current fiscal year. In that case, she’ll collect three times her salary plus target bonus.
At the same time, Standley, who was hired at $900K a year, will see his salary go up to $1 million and he’ll be eligible for a 200% bonus. So basically, Rite Aid will be paying for two CEOs for the next year, even though starting in June, Standley will be the only one with the actual title. Meanwhile, Rite Aid’s long suffering investors (and apparently its long suffering employees judging by some of those comments in our earlier post) seem to be getting the short end of the stick on this one.
Image source: Hoboken 411
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Posted in Tags: 8Ks, CEO, Chairman |
 11 Comments » |
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January 29th, 2010 at 7:01 am
Most of Rite Aid’s management are former Rite Aid cashiers. Having no experience with successful organizations, they can only repeat whatever they are told. That’s a problem in this top-down organization where the ‘top’ were yesterday’s down. RA’s benefits and wages are the industry’s worst, and the work atmosphere is poisoned. Suggestions are met with ‘not invented here,’ and of course, that’s true. Nothing worthwhile was invented at this unpleasant company. Consumer Report’s rated RA dead last in customer satisfaction (far behind the former Eckerd), and #1 in prices (the most expensive Rx to shop), a deadly combination. RA is an employer of last resort, and desperately needs outside management who can bring in fresh ideas.
January 29th, 2010 at 12:02 pm
One of the worst stock investments ever in my portfolio.
January 30th, 2010 at 1:27 am
Sammons is guilty as charged and while this compensation arrangement is a rape of shareholders, it is probably not that unusual. Shareholders get raped so often, it has become a misdemeanor. We should recognize, however, that Sammons was probably forced to step out of the CEO position, and the overlapping compensation was a way of avoiding a larger severance payment and also a way for her to save face. John Standley is sharp and capable, and comes with a good track record. Whether or not he can do anything meaningful with the current situation remains to be seen. But, I do think the comments made by “Dave” are unwarranted, and for the most part inaccurate. Upper management are not ex-cashiers from Rite Aid, and prices there are about the same as the other drugstore chains, on the average.
January 30th, 2010 at 1:48 pm
Judging by the performance of Rite Aid since Ms. Sammons took the top position of the company there should have been NO incentive payment made at all during her tenure – not to mention upon her finally exiting the company (-admittedly, the company has been performing poorly for a much longer period than Ms. Sammons has been in charge).
The only positive aspect of the shameful exit package granted to her by another irresponsibly acting Board is the fact that, by all indication, her replacement as CEO, John Standley, will hopefully be a much better leader for the company – as long as he is willing to break up some of the fossilized cultures and practices that have kept this company at the bottom of its industry.
February 1st, 2010 at 2:13 pm
The debt load is continuing to weigh this company down. I have sold all my shares, and I am running away from this company. I stopped shopping there as well. I can’t find the products I need. Things do not look good for their future.
February 27th, 2010 at 8:40 pm
I have been with the company for over ten years now and have been everything from a cashier to assistant manager in that time. I came on when the mess with corporate had just been exposed. The problem is not greed at the highest degree, but that they have moved away from their foundation. No building will stand if you first lay a foundation and then build the structure apart from the begining blocks. The man who started this company was pushed out by his son and the son through away all his fathers work for lack of honor. What is needed in to return to the place that was started, and build again. The man that had a vision for “Rite Aid” did so because the minimum pricing was lifted. Now look where we are. If the people you employee can not afford to purchase the products you offer there is something wrong. I pray that the “new” corporate leadership will honor the begining, or they shall find themselves at a sad end.
March 5th, 2010 at 9:48 pm
i work at one of rite aids distribution centers and i didnt know the sweat shops of the 20s still existed until now. They abuse and treat there employees like dogs,could care less about employee familys,force to work mandatory ot on hours notice,risk employes and customers health with rodent infested ctrs and products..dont shop rite aid
April 11th, 2010 at 10:15 am
I work at a Rite Aid that used to be an Eckerd’s. Rite Aid is an awful company to work for. I’m 45 so I’ve been around other corporations, not just Rite Aid. They continually cut employee hours – try successfully running YOUR household, Mary Sammons, when you don’t know how much your next paycheck will be. OH and maybe you’d like to work til 10 at night with one other employee in the store with you. I’ve told my family if I’m ever hurt in a robbery gone bad to sue the socks off Rite Aid. Maybe if the jerks in Corporate would treat their employees like people, they’d see a turn-around in their stores.
And the 15-minute prescription guarantee? Really, do you want the pharmacist to rush through YOUR medication check or the next guy’s? Remember when Pizza Hut (or was it Domino’s?) offered the 15-minute guarantee back in the early ’90s? They dropped that get-rich-scheme after someone was killed in a car accident. Don’t be surprised if history repeats itself. I’d like to know if the marketing genius who came up with the 15-minute prescription guarantee ever worked in a pharmacy? We’re supposed to be a professional, medical enterprise that cares about PATIENTS – not acting like the frycook at McDonald’s flipping burgers as fast as we can.
And ditto’s with what Kimberly said; if I can’t afford to buy things where I work, there’s a problem, don’t ya think? Seriously, the cashier across the street at the grocery store starts out making more then I do after 3 years at Rite Aid. Yet I’m a pharmacy tech with 2 years of education who has to have mandatory continuing ed every year. Why do I stay? Because my local managers are great. I have school-age kids and they give me flexible hours and work around my kids school schedules. I love my job and my local store but Rite Aid sucks.
July 6th, 2010 at 12:41 pm
I strongly doubt that they will ever be able to turn this company around with the chronic negative attitude they have towards their employees. This negativity permeates their stores and customers pick up on it when they shop there. A good example of their bad attitude towards employees is their publication of the “LP Files”. This rag is designed to show employees in a bad light and has a threatening tone to it. They seem to want to create a wall with employees and create an “Us vs. them” type of culture. In order to ever turn the company around they have to get employees on their side. This attitude is probably left over from when the Grass family owned them. There is more to running a retail company than just crunching numbers.
July 14th, 2010 at 1:22 am
I have worked for Fay’s, Eckerd, and Rite Aid since 1998. Drug store retail pretty much destroys your soul no matter what company it is, but Rite Aid is the only one that has made me feel truly embarrassed to say I work there. We front-end employees are treated like mere chattel, while the by-god pharmacy employees who walk on water get better pay, better hours, and better treatment. This is a major reason why customer service sucks so much in their stores; front end employees are underpaid and they know it, and watching rx people leave two hours before them every saturday just rubs salt in the wounds. I take a great deal of pride in providing excellent customer service because I have been at this a very long time, but I just don’t have the heart to demand the same of my cashiers. Please, please, please, if you are unhappy with Rite Aid, and you probably are, call and complain. 1-800-RITE-AID. The Wellness card sucks, the rx hours suck (why is the store open but I can’t pick up my script!), the stock is only good for selling short, and the service blows. Oh, but it’s my rite aid and I love it!
August 25th, 2010 at 12:41 am
since it’s been turned into rite aid there is no more laughter in the workplace. Everyone is so depressed that any stupid thing wil get them fired and corporate seems to be just interested in showing that their doing something without actually accomplishing anything in order to keep their jobs also. Dm’s don’t know anything. everytime we get a new one there are different rules they want us to follow or new “ideas” they want to put into place that just waste time. The only thing keeping me sane is that i love my staff, but if corporate knew that they would move me to a new store in a second, because they want all us managers to be soulless evil robots. I’v been working here for 11 years and i only make 10$ and hour!!! thank god my other half has a job so we are able to pay our mortgage, But every time I see my hours cut I just don’t know how were going to make it. I’ll tell you one thing though. I won’t risk myself following people around anymore to see if their stealing. i aint risking my life for this company anymore. fuck em