Society & Culture Costco

[Pie eyed]

Surely there are only two toilet roles. Unless you count vomiting, then there's three.

What about the other thing?
You know.....feeding the chooks?

 

[J_Moore]

you would think market-comparable pay for management would be justified. $700k is peanuts.

Well, it's not really peanuts in actual, real world terms (not meaningless executive dick measuring) and this would be their point. You can get someone perfectly capable of running a well-staffed big company for 700k.

You've seen the graphs that demonstrate a pretty non-existant link between CEO remuneration and company performance , yeah?

Article linked below. He also collected a lazy 4 mil in stick options, but who's counting?

http://mobile.businessweek.com/arti...ds-the-cheapest-happiest-company-in-the-world

 

[checkraiseulite]

Well, it's not really peanuts in actual, real world terms (not meaningless executive dick measuring) and this would be their point. You can get someone perfectly capable of running a well-staffed big company for 700k.

You've seen the graphs that demonstrate a pretty non-existant link between CEO remuneration and company performance , yeah?

Article linked below. He also collected a lazy 4 mil in stick options, but who's counting?

http://mobile.businessweek.com/arti...ds-the-cheapest-happiest-company-in-the-world

no but i'll assume you can provide such graphs as adjusted to take into account the general business cycle.

in "actual, real world terms" the $20 per hour their SAs are getting is pretty juicy, especially considering cost of living in the states. They'd probably be doing a lot better than teachers, cops and nurses here. I'd argue management would be a huge part of why these people are in such a position.

i guess my point is how costco is managed is a huge part of their success. it takes management skill to outcompete in retail, especially in such a cutthroat market like the US, where the are paying unskilled workers a 100%+ premium on minimum wage and still making a decent profit.

$700k is peanuts n comparable terms, but i took your statement to mean >$700k inclusive of options which are obv a huge part of any executive salary. as a yardstick costco is 2nd largest US retailer, walmart is largest. walmart ceo is paid >$20m pa.

if i had the runs on the board as costco ceo and was only getting $700k when the CEO of my competitor was getting $20m, i'd be mounting a decent argument for a pay rise.

 

[J_Moore]

You might demand a pay rise purely based on the salary of your competitor, but clearly Costco are happy to hire (and able to find) capable executives less concerned with what their rivals are earning. I imagine the CEO of Costco thinks that his base salary is more than adequate for his needs. What does it matter what the CEO of Walmart is earning?

 

[J_Moore]

As for the graph:

 

[checkraiseulite]

my initial point was that it's unusual for such low executive pay.

for a well run-company, whose five year financials are crushing walmart where CEO pay is >20x higher, ceo rumeneration is crazy low.

as for the graph you'll have to interpret it.

 

[J_Moore]

Oh it's certainly unusual, which is why I commented on it.

It undermines the oft-stated view that, for a company to outperform its rivals, it needs to attract the best executive talent by paying them more than its competitors - the essential driver behind the massive increase in executive vs ordinary earnings over the past few decades (well, that and the fact boards and C-level are pretty much the one class of people so keep giving each other financial handjobs).
The Costco example shows you can attract good executives at rates far below the "market rate".

The graph basically shows that company performance (at least measured in terms of shareholder return) is barely linked to executive pay. It's not an inverse relationship or anything. There's basically no pattern at all.

 

[Caesar]

There's a difference between saying there's no real correlation between executive pay and performance, and saying you can pay someone <5% of what they would earn in a comparable job elsewhere and still attract / keep decent talent.

The current Costco CEO has only been in the job about a year, and was promoted from within. Prior to that the CEO was the founder of the company, who obviously had squillions in equity and his salary was immaterial. I'd say it remains to be seen whether the strategy will work in the long term.

 

[cartel]

Live reasonably close to the one in Ringwood, so I'm hoping to go check it out.

I live by myself mostly though and the storage in my place isn't massive.

While the $60 membership isn't a massive amount of money, I don't really want to be wasting money for something I won't use.

There is next to no information available on prices/range etc.

Can you go in and just have a squizz, or do you have to be a member to do even that?

 

[Tulip]

Live reasonably close to the one in Ringwood, so I'm hoping to go check it out.

I live by myself mostly though and the storage in my place isn't massive.

While the $60 membership isn't a massive amount of money, I don't really want to be wasting money for something I won't use.

There is next to no information available on prices/range etc.

Can you go in and just have a squizz, or do you have to be a member to do even that?

I think you need a membership to get in, but if you go with friends who have one they allow it as long as the transaction goes through them.

It's not all bulk packaged product. The meat and bakery sections are very cheap. Most people just don't live near enough to the shop to justify going in every other week, so they use it for the 20 packs of tissues and whatever else.

 

[Bunk Moreland]

There's a difference between saying there's no real correlation between executive pay and performance, and saying you can pay someone <5% of what they would earn in a comparable job elsewhere and still attract / keep decent talent.

The current Costco CEO has only been in the job about a year, and was promoted from within. Prior to that the CEO was the founder of the company, who obviously had squillions in equity and his salary was immaterial. I'd say it remains to be seen whether the strategy will work in the long term.

Spot on. Sooner or later Costco will hit a point in their life cycle where the best thing for them will be to hire very good executive from outside. And they're not gonna get that with that pay.

The right thing to do for the business would be to pay the money, and I'm sure they will.

 

[tandino]

Drove past the Ringwood store on the weekend. The place is huge, it's got its own gravitational pull.

Ringwood Square is still a dump, though.

 

[J_Moore]

Spot on. Sooner or later Costco will hit a point in their life cycle where the best thing for them will be to hire very good executive from outside. And they're not gonna get that with that pay.

The right thing to do for the business would be to pay the money, and I'm sure they will.

If they do, it won't be because they have to (they can get a good executive without offering a 20mil a year package), and if the business is in decline at that point, there's no guarantee that the CEO will actually be able to do much about it (not that it will affect his pay).

The way that enormous CEO remuneration is spoken about as some inevitable law of nature, rather than just a cultural norm, is bizarre.

You just hope the company can avoid this sort of shit - http://www.buzzfeed.com/tracyclayto...holding-a-holiday-food-drive-for-its?s=mobile

 

[peternorth]

used to live on ringwood st, spitting distance to costco. other places of note on ringwood st are eastlands and the ringwood magistrates court. a great location for the court considering the ferals that roam the street at night (and during the day too i guess). costco would've looked at their security i guess.

i myself enjoy costco once in a while. makes me happy.

 

[Scotland]

If they do, it won't be because they have to (they can get a good executive without offering a 20mil a year package), and if the business is in decline at that point, there's no guarantee that the CEO will actually be able to do much about it (not that it will affect his pay).

The way that enormous CEO remuneration is spoken about as some inevitable law of nature, rather than just a cultural norm, is bizarre.

I like their approach. If you're applying from outside to be the CEO of Costco, you're doing so knowing that you're essentially applying for a job that pays 1/20th of your market 'worth'. You apply because yu want the position.

They probably won't get the Marius Kloppers of the world applying, but is that such a bad thing?

 

[peternorth]

the lamb cutlets sold there are really nice

 

[Caesar]

It remains to be seen whether their corporate culture is strong enough to overcome such massive pay disparity. I agree that attracting the so-called 'best' executives is of questionable benefit, but ultimately if you have a high profile job that pays so little, there is a pretty substantial risk of people jumping ship after gaining experience / exposure to organisations that can pay them huge amounts of money. Even if you replace them with qualified people, high turnover creates a massive amount of instability at high levels of your company.

Up until 12 months ago the CEO was the company's founder, who had a lot of very specific ideas about how the company should be run and from all accounts commanded huge amounts of personal loyalty from his employees. Maintaining that culture now he is gone is a very tall order.

 

[rocker_oz33]

Just a little bigger than usual.

Send from crapatalk2 jumbo number2's.

 

[pantskyle]

I giggled every time I read Ringwood.

 

[rocker_oz33]

Ringwood is that where car city is? sorry i dont know melb all that much.

 

[Catfish Alley]

Yep

 

[MisterMarcus]

Tomato sauce in 8L bottles and breakfast cereal in 5kg packs.....it's kind of like the walk up version of the Crisco Hamper......

 

[BotsMaster]

When does Ringwood open?

Tomorrow, can't wait

 

[Scotland]

Tomato sauce in 8L bottles and breakfast cereal in 5kg packs.....it's kind of like the walk up version of the Crisco Hamper......

At Costco that would be what, $10-15? At Coles or Woolies buying equivalent products you would get 2L of sauce and 1kg of cereal for that amount, for example.

If it was a Chrisco Hamper you'd pay $2 a week (ie $104) for the convenience of $30 worth (at Coles prices) of 1L sauce bottles and 500g boxes of cereal to arrive just in time for Christmas.

Frytakeallmymoney.jpg.

 

[Scotland]

I don't know what I would buy if there was a Costco over here. I stopped buying bread altogether from supermarkets (a bonus being their bread isn't much chop) since they insist on doing 'two loaves for $5, one for $4.50' deals. I struggle to finish one loaf before it goes mouldy, I don't need two. Likewise milk, juice etc. I just don't need giant quantities of. Meat I could freeze, but I only have so much freezer space and if I've got 20kg of chops and one ice cube tray that's not a particularly efficient use of my freezer.

I reckon I'd buy toilet rolls in the most ridiculous quantity they had. 10c a roll if I buy 1,000? Deal! I'd say my digestive system is about standard so I have no use for that many, but it's not like they spoil and I could turn my house into a toilet roll fort. I already stack the remainder of any new packet into a pyramid on the shelf above the loo, so a fort seems the logical next step.