Nike Prepared to Cut Jobs as CEO Gets $45 Million Payday
Nike Inc. (NYSE: NKE) lost $790 million in the most recent quarter, due to the effects of COVID-19. It did what most retailers have done recently. It either cut jobs or plans to do so. Part of Nike’s comment on the program is that it wants to begin “building a flatter, nimbler company.” Almost certainly, thousands of Nike workers will be pushed out the door. Nike’s new CEO, John Donahoe, on the other hand, has done astonishingly well. When he joined Nike in January, he received a “signing bonus” worth as much as $45 million in cash and stock. He may make as much as $18.5 million in his first year on the job.
The median pay for Nike employees last year was $25,386.
Families of four with an income of $26,200 or less live below the poverty line.
For the quarter that ended May 31, Nike did have a brutally bad quarter. Revenue fell 38% to $6.3 billion. Ninety percent of its stores were closed for eight weeks due to the pandemic. As of the earnings announcement, 90% of Nike’s stores were open. Its retail traffic was improving. Nike’s balance sheet was in outstanding shape. It had $8.3 billion in cash and cash equivalents.
Donahoe can fairly say the company was not run well prior to the pandemic. If this was not the opinion of the board, he would not have been hired. He also can fairly claim that a drop in results due to the pandemic is not his fault either. What he cannot say is that he has shared in the pain that will be part of the dismissal of thousands of mostly low-paid workers who will find it extremely difficult to get new positions.
Does Donahoe have a financial or moral obligation to contribute back to the company any of his unbelievable compensation? The answer is no. But he might consider doing it anyway.