According to the owners of wage-cutting, price-fixing Loblaw Companies Ltd, Canada’s largest food retailer, the company’s soon-to-be-former CEO Galen Weston Jr was underpaid for his performance in 2022. Evidently, it makes sense to celebrate and reward those who make a killing when regular working people everywhere are struggling. To make this sort of logic work, one must aggressively gloss over the relationship between the celebrants and the consumers who made this profit bonanza possible — that is, the working people who have had to suffer outrageous grocery bills.
Weston’s increased payout, totaling $11.7 million last year, has put Canada’s self-described “face of inflation” on the defensive — and for good reason. The scandal is a reminder that the payouts enjoyed by Weston, and all other owners of capital, do not fall from the sky; they come from exploitation. CEOs like Weston are not lapping their employees in labor and time spent on the job. Such grotesque earnings are a result of either price gouging or wage and benefit cuts.
A Take Home of 340 Years’ Worth of Regular Pay
According to Loblaw’s latest management circular, a commissioned study by Meridian Consultants, amid booming profits, the scion of Canada’s third-wealthiest family needed a raise. “The results of the 2022 review suggested that Mr. Weston’s total direct compensation was below the market median and Weston’s and Loblaw’s compensation policy objectives,” the circular claims. Upping Weston’s pay, apparently, would help the company to “compensate directors appropriately for their time” and to remain “competitive.”
With this increase, a raise of $1.2 million, Weston was able to soak up $11.7 million in compensation. In contrast, it would take the average grocery store worker multiple lifetimes to earn what Weston took just last year. According to Statistics Canada, the average Canadian grocery worker made $18.97 per hour in 2022. It would take a full-time worker, with annual earnings of $34,525, more than 340 years to earn Weston’s 2022 take home of $11.79 million.
But Weston’s share of the company’s stock extends well beyond this. As the same circular notes, Weston himself owns 56.3 percent of the company’s common shares, totaling roughly $12.9 billion in eligible holdings. Collectively, the board controls an enterprise worth over $40 billion.
That pool of wealth is in excess of the gross domestic product of entire Canadian provinces. It exceeds the budgets of key Canadian public programs like the Public Health Agency of Canada, the Canadian Mortgage and Housing Agency, and the Ontario government’s school repair budget. This is, in short, an enormous concentration of wealth and power, beyond that of many elected officials.
The Face of Inflation
Weston’s raise has done very little to bolster his claim, made to Canada’s parliament last month, that the profit of the company — which in 2022 made a record $1.9 billion — “doesn’t go to me.” Against the backdrop of such farcical denials, the financial papers say plainly what everyone knows is actually happening: Weston received this increase, as the Financial Post asserts, because the company has seen record profits. In this telling, the fact that these profits have accrued while the Canadian economy and Canadian society are experiencing a deep crisis is only further proof of Weston’s canny business acumen. It has nothing to do with price gouging or chicanery of any kind.
“Increasing executive pay as profits and share prices rise,” the Post notes, “reinforces to investors that the board is properly incentivizing executives to manage the company in an efficacious manner.” The paper further stresses,
The responsibility of the corporate executive is to act in the interests of his employer, the shareholders, and the responsibility of business in a free society is to increase its profits. In 2022, Galen Weston and Loblaw did just that: adjusted diluted net earnings per common share rose from $5.59 in 2021 to $6.82 in 2022.
But where did these profits come from?
According to Weston’s testimony, “We’re a big company and the numbers are very large, but it still translates right down to the bottom line at one dollar [of profit] per 25 dollars of groceries.”
It probably goes without saying that Galen Weston was not bagging these groceries, stocking shelves, or maintaining the deli counter. His minimum-wage workers were doing all these tasks, leaving him free, if the spirit moves him, to count his personal fortune from his family’s palatial estate in Vero Beach.
As with the financial press’s unguarded acknowledgment that Weston’s raise is simply how the game works, Loblaw’s parent company has been very clear about how profits are generated. The company sees potential “profit improvements” in wage cuts or — to use the business speak — in “variable cost” reductions.
Former CEO Richard Currie was quite transparent about deploying such strategies. As he said in a 1994 address to the Ivey Business School, the company will achieve “profit improvements” through “bottom-line cost reductions” and “lowered breakeven points.” Because fixed costs — for material, buildings, and supplies — are set from outside, Currie candidly noted, “labor costs” are key to keeping outlays low. Labor costs, “the next largest cost in the food retailing business,” Currie notes, represent the overhead that can be cut.
Since Currie’s tenure, Loblaws has engaged in lockouts and union-busting work across its enterprise. To this day, the company lists potential union drives and “living wage campaigns” as potential risks to its profit margins. Meanwhile, Weston’s company has been denounced for gouging many of those same workers and the broader working class with rising grocery prices — charging nearly $40 for a package of chicken breasts, $41 for olive oil, almost $30 for detergent, and more.
On Twitter, the company has claimed that while it is “the face of inflation,” it is not the cause, and that its association with spiraling food bills is a case of scapegoating. Nonetheless, by its own account, its fourth quarter earnings in 2022, a net income of over $529 million, were 10 percent higher than the previous year. At the same time, more Canadians were forced to turn to food banks than ever before.
Every dollar that goes to Loblaw Companies is a dollar that does not go to workers. It’s value that is extracted from workers collectively — either in the workplace or in their regular food purchases.
No, He Did Not “Earn” His Pay
According to the Financial Post, Weston’s exorbitant payout should be shielded from criticism — these are his “earnings,” and he supposedly “deserves,” it. As the headline reads, “Galen Weston deserves his raise, which is Loblaw’s business not anyone else’s.”
But Weston has done nothing to earn his payout or his wealth. Galen Weston does not work on the floor of his own grocery stores or warehouses. He does not bag groceries for impatient customers, operate a forklift in one of his warehouses, or, more generally, contribute anything of value to ordinary people. If decisions at Loblaw’s were made by workers rather than shareholders, it’s a sure bet that his remuneration would be closer to his actual contribution — and rigorously cut down in size. Weston’s exorbitant payout is a result of his position, which, in turn, is a knock-on effect of his inherited wealth. He possesses a share of the value produced by Loblaws’ workers and a monopoly over an essential good — purchased by many of those same workers.
The Post claims that
society functions best when businessmen behave as businessmen instead of as politicians, and businesses function as businesses. . . . Having fulfilled his responsibility with considerable success, there is no good reason for anyone to begrudge [Weston] his raise.
It might be true that this — with millions dependent on food banks and many more condemned to poverty wages and unemployment amid rising prices — is the best possible world that the capitalist system has on offer. If so, then by all indications, there is an undeniable and urgent need for radical improvement. We don’t have to live in a world where people like Weston have the power to cut wages and benefits and hike food prices beyond what ordinary people can pay.