Sears: CEO salary "not out of line"
March 20, 2012 (CHICAGO) (WLS) -- Just as Sears has tool departments, appliance departments, clothing, electronics and shoes -- all separate but under one roof -- their CEO's eight-figure compensation is unrelated to a recent State of Illinois tax break, according to a company spokesman on Tuesday.
The I-Team reported on Monday that Sears' CEO Lou D'Ambrosio was compensated a total of $9.9 million in 2011 according to newly filed documents with the Securities and Exchange Commission. The ABC7 report also cited expense reimbursements of more than $800,000 to D'Ambrosio that covered his travel to and from Philadelphia where he lives; that is 400 times the average commuting cost paid by Chicagoans even though Chicago ranks highest in the nation.
"If you add the cost of his commuting and related expenses to his salary and bonus, you will see that this is not out of line with his peers at other major companies (Fortune 100 CEOs, CEOs in Chicago or retail CEOs)" said Chris Brathwaite, vice-president of corporate communications at Sears Holdings. "In addition, Sears Holdings won't receive a dime from the state if we don't make investments in our HQ facility and campus" Brathwaite added.
Last year the Illinois general assembly and Gov. Pat Quinn approved a $150 million tax credit that resulted in Sears maintaining it's corporate headquarters in northwest suburban Hoffman Estates. The company had been considering moving it's 6000-employee campus to another state where tax benefits would be more favorable.
"We are required to invest $300 million over the 10-year period or $30 million per year to receive our annual benefit (max of $15 million per year)" Brathwaite stated. "Any funds we receive back from local property tax due to the extension of the EDA are a reimbursement for monies we already spent on local infrastructure."
A spokesperson for Illinois Governor Pat Quinn on Monday said the governor doesn't approve of Sears spending more than $800,000 a year just to get its CEO to the office from his home in Pennsylvania. But in a statement, the governor's press secretary defends the sizable Sears tax credit, saying that it was necessary to keep jobs here and resulted in a large Sears investment plan.
Sears has been hit hard by the nation's economic downturn, as have most retailers. The company has recently announced additional layoffs and store closings-adding to those already in place from earlier last year.
As the I-Team noted in Monday's report, D'Ambrosio's pay is not unusually high for a large corporate boss. While Sears was required to report his income as nearly $10 million for 2011, the company spokesman contends that the figure is somewhat misleading.
"The $8 million stock award vests over a three year period" noted Brathwaite. "While it has to be reported in the year it was granted, he didn't receive that entire amount last year."
FULL STATEMENT FROM GOVERNOR PAT QUINN RE. MONDAY'S INTELLIGENCE REPORT:
The Governor certainly doesn't approve of that [the $800,000 travel expense for CEO to get to work.]
However, the package you speak of, which passed the General Assembly with a bipartisan vote and support from all four leaders, pertained specifically to Sears Headquarters - it kept the 6,000 jobs that currently exist at the headquarters here in Illinois. This also has an large multiplier effect -- Sears headquarters creates a direct economic impact of $1.5 billion and supports thousands of additional jobs in Illinois. The package also ensured a private investment by Sears of $300 million in Illinois, at a time when Ohio was offering Sears a far more lucrative investment package.
In addition, the Governor secured tax relief for working families as part of this package. In fact, he said he would not sign any bill if tax relief for working families was not part of the package. Governor Quinn's efforts resulted in an annual $105 million dollars in targeted relief for low-income working families through a boost in the Illinois Earned Income Tax Credit and also an increase in the value of the personal exemption. Improving Illinois EITC will help almost 1 million Illinois families.
We are watching Sears carefully and will hold them accountable to live up to their commitment as part of the package. If there is any violation in the agreement on their part- if they did not meet their investment and jobs numbers, for example- the incentive would be eliminated.
Bottom line is that the Governor had a decision to make when it came to whether or not to sign this bill. Save the jobs- or let them go to a state that was offering three times the incentive as Illinois had proposed. He decided to protect thousands of Illinois jobs and hundreds of millions of investment in Illinois while also increasing tax relief to working families.
Governor Pat Quinn
i-team, chuck goudie
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