Boston, MA 06/06/2014 (wallstreetpr) – Staples, Inc. (NASDAQ:SPLS) performed poorly in 2013 that the company’s executives did not qualify for bonus compensations. However, four top executives took home a one-time payout as a reward for their extra work in turning around the company.
The decision by the executives to allocate bonuses for themselves amid poor results did not go down well with shareholders and shareholder meeting earlier this week left no doubt about that. In a nonbinding vote, shareholders, following the recommendation of an influential proxy adviser Institutional Shareholder Services (ISS), rebuked executive pay practice by 54 percent of the votes.
In the same meeting, shareholders also slightly supported the recommended to separate Chairman and CEO roles. The recommendation got a backing of 51 percent of the votes cast.
Unsettling practices
Although the shareholders’ rebuke on executive compensation practice and separation of CEO and Chairman positions are nonbinding, shareholders nonetheless sent clear signals about the unsettling developments in the office supplies retailer.
Amid failed or sluggish turnaround efforts, shareholders have increasingly become concerned about executive bonuses. As in the case of Staples, shareholders felt it unfair to reward executives with little proof for their efforts.
In fiscal 2013 when Staples, Inc. (NASDAQ:SPLS) executives missed out on standard compensation because of poor performance. However, the company went ahead to issue $500,000 that was spread among four executives as compensation. The company tried to justify the move as an effort to recognize the added responsibilities that the executives have assumed in the ongoing turnaround. Moreover, the company claimed the bonus worked in the benefit of talent retention.
Walking a tightrope
Engulfed with competition from online rivals and high costs and expenses, Staples, Inc. (NASDAQ:SPLS) has little to show for its ongoing turnaround. Even the widespread closure of nonperforming stores has not helped earnings and the most recent quarter tells the story. The company earned $0.18 per share on revenue of $5.70 billion in 1Q2014, yet analysts expected $0.21 per share on revenue of $5.62 billion. Both earnings and revenue fell from last year’s figures.
