Sysco downsizes its executive entitlements…

November 1, 2010

This isn’t intentional, but we noticed that – for the third time in as many months – we’re writing a post on the first day of the month about Sysco Corporation (SYY).

In this case, the filing is a commendable 8-K that Sysco filed Oct. 27 to disclose changes to its executive relocation policy. The changes, which went into effect immediately, apply to employment agreements between Sysco and its future CEOs, CFOs, Presidents, COOs, Executive Vice Presidents, and “…any other officer of the Company designated as a Named Executive Officer for purposes of the proxy statement….”

In a nutshell, the company states that it:

  • will not reimburse an executive for a financial loss if he/she sells a house in order to relocate.
  • will only provide a gross-up to cover taxes on specific pre-approved relocation expenses, such as the cost of moving household goods and cars, real estate fees incurred to sell a home, closing and other costs paid to purchase a new home, reasonable attorney’s fees, and up to six months— rent in the new area to which the executive was asked to relocate. The filing added, “No other relocation expenses will be eligible for increased payments to cover applicable taxes.”
  • will include a clawback provision in all future relocation agreements requiring an executive to repay some or all of a reimbursed payment if his/her employment is terminated within a certain period of time, if the termination is for a reason other than death, disability, a change in control, or termination without cause or for good reason.

While we’re reluctant to be too effusive with our praise (the filing still contains a rather generous list for gross-ups, after all), we do think Sysco deserves credit for taking steps to improve its corporate practices. On Sept. 1, we wrote this post about Sysco’s new ethics policy; and on Oct. 1, at the same time that we called Sysco out on its lavish executive compensation practices (in this post), we also applauded its decision to stop entering into new severance agreements with its executive officers.

As we’ve noted before, executives tend to be paid very, very well. They don’t need extra subsidies to do their jobs, especially when shareholders are footing the bill.

Image source: R. Clock via flickr

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