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