Former Circuit City CEO Gives Back
By George Anderson
Alan McCullough certainly didn’t leave his post as the CEO of Circuit City Stores Inc. as a pauper, but according to filings with the Securities and Exchange Commission (SEC), he has chosen to forfeit $3.3 million in performance-based stock awards.
Mr. McCullough also turned down stock options potentially worth another $3.6 million, according to The Associated Press.
In Circuit City’s filing with the SEC, the consumer electronics chain said Mr. McCullough chose to set aside 400,000 stock options as part of “Chairman’s Awards” to employees “who have the potential to make significant contributions to the achievement of the company’s performance goals.”
Moderator’s Comment: What message will Circuit City employees take from Alan McCullough’s decision to forego a portion of the compensation due him from
the company? What criteria would you use to choose who received stock options through the “Chairman’s Awards” program at Circuit City? –
George Anderson – Moderator
Some of James’s suspicions and cynicism may possibly be justified but I prefer to look on the bright side today and see this as a very positive and highly motivational action. Criteria for giving away the loot? As he said, potential to do the business good. So a combination of long and short term employees, perhaps based on performance but more on some sort of measure of enthusiasm and commitment. Not instantly sure how you would measure that but give me time to think…
It’s a great positive signal to the shareholders and the employees, even though the amount per person may be modest. What a contrast between this signal and the signals recently sent by Home Depot.
Circuit City continues to do things right. Kudos.
Well, it’s a “small step for mankind,” and hopefully, a major step for everyone owning stock in companies.
And we continue to scratch our heads on why the younger Generations mistrust the Corporate World; and needless to say, the Beltway corridor!
Let’s see what happens; to include new Board of Directors hired by CEOs, and approved by the Board; for Compensation committee work. Oh, and they are close friends.
Great book by Lee B.Thomas Jr. on Ethical Business Relationships. Butler Publishing in Louisville. 502.897.9393
Clean up time… Hmmmmmmmmmm
A nice gesture by Mr. McCullough. One presumes that he was already set for life based on his prior year’s cash and non-cash compensation. As a confirmed cynic, I want to know how many options and shares he already held prior to this announcement? Could be that the positive buzz generated by his decision might boost their value sufficiently to make up for a large part of his sacrifice. Call it enlightened self-interest then? Regardless, it’s good to see a few incentive dollars finding their way to employees.
Mr. McCollough’s gesture may resonate with employees yet it is not a unique play. Forgoing compensation has become a trend over the past few years particularly with tech companies (perhaps the most publicized was Carly Fiorina at Hewlett-Packard)…John Chambers at Cisco also gave up his salary one year when company performance plummeted. Cynics say that some of this largess is about executives and boards finding creative ways to cut cash compensation while making up the loss in ways that take advantage of weak disclosure requirements.
Having some friends and former clients at Circuit City, some did indeed receive a very nice amount from this. What Alan did was extremely rare and did amazing things for both morale and motivation to keep taking the company further. How nice it would be if others followed his example.
Most CEOs would think he was nuts. But this is a very nice thing he is doing. Setting a criteria would be difficult. I suppose I would show preference to full time employees with the most years of experience. Then secondly base it somewhat on store performance. Even bad stores have some very good hard working employees. I wonder how much each employee might get? I have a hunch it many not amount to more than a few hundred dollars per employee and may not be enough to impact anyone’s life.