Attention Shoppers: Executive Compensation at Kroger, Safeway, Costco and Whole Foods

Posted: 3 Oct 2009

See all articles by David F. Larcker

David F. Larcker

Stanford University - Graduate School of Business

Brian Tayan

Stanford University - Graduate School of Business

Date Written: February 15, 2008

Abstract

Retail grocery sales represent a significant portion of the U.S. economy. The industry was highly competitive, with companies operating on low gross and net margins. As a result, grocery stores were generally under significant pressure to reduce their operating costs in order to maintain profitability. For the last several decades, the grocery industry grew roughly in line with gross domestic product and was considered a mature industry. In order for companies to succeed, they needed to find effective strategies to steal customers from competitors. Many sought to differentiate themselves through store format, store location, product mix, ancillary services, or quality of customer service. Strategies, however, could easily be imitated by competitors, putting grocery store chains under constant pressure to innovate and remain efficient. In general, growth also required the expansion into new store locations. Companies that failed to grow often went bankrupt or were acquired.

This case explores executive compensation at four retail grocery stores: Safeway, Kroger, Costco, and Whole Foods. Consideration is given to each company's strategy and market position and corporate governance structure. Readers of the case are asked to evaluate in a critical manner the appropriateness of each company's compensation strategy and compensation levels, given company performance.

Keywords: Executive Compensation, Board of Directors, stock options, Corporate Governance, Performance Measurement, bonuses

JEL Classification: G3

Suggested Citation

Larcker, David F. and Tayan, Brian, Attention Shoppers: Executive Compensation at Kroger, Safeway, Costco and Whole Foods (February 15, 2008). Rock Center for Corporate Governance at Stanford University Teaching Case No. CG -13. Available at SSRN: https://ssrn.com/abstract=1482082

David F. Larcker (Contact Author)

Stanford University - Graduate School of Business ( email )

Graduate School of Business
518 Memorial Way
Stanford, CA 94305-5015
United States
650-725-6159 (Phone)

Brian Tayan

Stanford University - Graduate School of Business ( email )

655 Knight Way
Stanford, CA 94305-5015
United States

Register to save articles to
your library

Register

Paper statistics

Abstract Views
2,312
PlumX Metrics
!

Under construction: SSRN citations will be offline until July when we will launch a brand new and improved citations service, check here for more details.

For more information