Macy’s Inc. (NYSE: M) CEO Jeff Gennette got his job in March 2017. Before that, he was the retailer’s president. Gennette’s compensation for 2018 and 2017 was over $23 million. Yesterday, he fired 2,000 people and announced the closure of 150 stores. As people lost their jobs, Gennette became wealthy. In the most recently reported period, he made 582 times the median salary of Macy’s employees.
Gennette’s 2019 compensation has not been disclosed but will be within a few weeks. Likely he will make several million dollars. In exchange for his pay, Macy’s shares are down 74% in the past five years and 33% over a two-year period. Macy’s shareholders have been decimated, along with the jobs of thousands of people.
If Gennette is not to blame for the Macy’s disaster, who is? The long-held belief among investors is that the CEO is responsible for results in any company. Gennette was promoted as part of a Macy’s turnaround plan. Instead, it has closed stores and continues to be hurt by e-commerce companies, particularly Amazon.com. Macy’s online sales for the most recently reported period were only $6 billion per year. That is against total annual revenue of about $24 billion.
Gennette’s “Polaris” strategy to turn Macy’s around shows no sign it has worked. Among its goals is to strengthen customer relations? How strong are they, if Macy’s has to close a fifth of its stores? The answer is that this part of the plan has failed.
When Macy’s announced the job cuts and store closures, Gennette said, “The more convenient, brand-right touchpoints we have, the greater loyalty and engagement we engender. This will enable us to grow with the next generation of American shoppers.” In some way he has to sense the plan has a problem. Macy’s 2020 and 2022 revenue forecasts are lackluster, at best. It is hard to say that future results will be a sign of improvement at Macy’s.
Gennette has become rich as CEO. Two thousand workers have not been so lucky.