Investors push to rein in Dollar General CEO pay and perks

Dollar General investors are pushing for shareholders to vote against executive officer compensation proposals at the company that raise “serious concerns regarding Dollar General’s governance, corporate priorities, and treatment of its workforce”.

In a letter to shareholders the SOC Investment Group, formerly known as the Change to Win Federation, pointed out that the median salary for a Dollar General employee in 2023 was $18,657 annually, or over $9 an hour, while Dollar General’s CEO, Todd Vasos, received nearly $183m in compensation from 2015 to 2021.

SOC is calling on investors to vote no on a “Say on Pay” resolution at the company’s annual shareholder meeting on 29 May that includes a rehire stock option package for the CEO, hefty severance agreements for executives and a substantial allowance for the CEO’s personal use of the corporate jet.

Vasos served as CEO of the company from June 2015 to November 2022, when he became a senior adviser to the company before retiring in April 2023. A few months later in October 2023, Vasos returned as CEO of the company.

His compensation for 2024 totals about $9.7m, but also includes several perks that could yield him substantially more through stock options.

“Our critiques on the pay package are twofold,” said Tejal Patel, the executive director of the SOC Investment Group. “It’s the way they’re granting it because it’s tied to options and this new term that they sort of created called ‘rehire options’ that we’ve never really heard of before.”

Patel noted the structure poses significant transparency issues, in addition to the stock options awarded by the board not being tied to performance and the exercise price for the options being set at a much lower share price than that at which the company’s stock is typically traded.

Also included in the CEO’s proposed pay package is $500,000 in reimbursement for personal use of Dollar General’s corporate jet.

“The company’s own peer group doesn’t even offer perks of this level,” added Patel. “I would say unusual and large perk packages can be indicative of larger problems with the executive compensation program design.”

The investment group is also urging shareholders to vote no on the company’s “Say on Pay” proposal due to the severance agreements for executives, which, Patel argues, basically guarantee severance will be paid. Patel noted the terms of the agreement make it difficult to calculate the exact amount of the severance packages.

“What that means is the company is effectively committing to paying these executives increasingly higher salaries either through renewing the employee agreement or through the severance if they don’t renew the agreement,” said Patel. “I think it’s important to point out the discrepancy between what the company is paying these executives to stop working at Dollar General versus what they’re paying their employees.”

The letter urging shareholders to vote down Dollar General’s executive pay proposal cited that the cash severance payment to the departing CEO Jeffery Owen in 2023 was $5,625,000, the equivalent of the company’s median annual pay for more than 300 employees.

In 2023, investors successfully pushed for an independent third-party audit at Dollar General on worker safety given the company being placed on Occupational Safety and Health Administration’s severe violator program due to numerous safety violations and fines at stores across the US.

“It’s the company’s responsibility to basically make sure the pay packages for their leadership team are aligned with better performance overall, and that includes better oversight of their workforce and making sure they are addressing the poor working conditions in a concrete manner,” concluded Patel.

Dollar General did not respond to multiple requests for comment on the effort for shareholders to vote down the company’s executive pay packages.


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