Posted at 12:57 p.m., Tuesday, December 18, 2007
Top Costco executive received $3.2 million
Associated Press
SEATTLE (AP) — Costco Wholesale Corp. President and Chief Executive Officer Jim Sinegal received compensation the company valued at almost $3.2 million in 2007, according to a proxy statement filed Tuesday with the Securities and Exchange Commission.Sinegal, 71, received a $350,000 salary; an $80,000 bonus; stock awards and options worth about $2.6 million; and roughly $68,500 in perks, including company matches for retirement contributions, life insurance, health care premiums and a vehicle allowance.
It's the seventh straight year that Sinegal, Costco's co-founder, has not taken a raise in base pay. Last year, he declined a $200,000 bonus after taking responsibility for errors in the company's stock-option grants to employees.
Chairman Jeffrey Brotman, 65, earned the same salary and bonus as Sinegal, but his total compensation came in slightly higher because he has opted to defer more of his pay than Sinegal and is earning more interest on it.
Like many companies, Costco lets executives set aside a chunk of their earnings, and it accrues interest at a higher rate than what's available to the general public.
The Associated Press calculations of total pay include executives' salary, bonus, incentives, perks, above-market returns on deferred compensation and the estimated value of stock options and awards granted during the year.
Costco earned slightly less in fiscal 2007 than in the previous year, but strong sales and cost-cutting have helped keep investors happy.
For fiscal 2007, which ended Sept. 2, the Issaquah-based company posted a profit of $1.08 billion, or $2.37 per share, compared to $1.1 billion, or $2.30 per share, in 2006.
The slip was partly tied to costs from an electronics returns policy the company concluded some customers were abusing, exchanging items such as flat-screen TVs long after they had bought them for models that had often dropped in price.
In March, the company ended its unlimited returns policy for consumer electronics, giving customers 90 days to return the items.
The change appeared to be paying off by the fourth quarter, when executives said the decrease in returns, among other things, helped improve the company's gross margin. That combined with strong sales growth, cost-cutting and an optimistic outlook executives have for 2008 has seemed to please investors.
Costco shares fell 25 cents, or less than 1 percent, to $67.92 in early afternoon trading Tuesday. The stock has traded from $51.52 to $72.68 over the past year.
