is Mr. Sinegal a hypocrite?
I don't often disagree with Bill Whittle, but the attacks on Costco's founder and former CEO Jim Sinegal by everyone are not exactly based completely in reality.
I worked for Costco for about 8 or 9 years. It was, without a doubt, the best job I've ever had. To say I was disappointed with Mr. Sinegal's support of Obama would be a gross understatement. However, there are a few parts missing from this story about his hypocrisy for taking a loan out to pay an extra dividend before the higher tax rates kick in. Everyone is focused on the fact that this will save Mr. Sinegal about 4 million dollars in taxes, but are ignoring the part, as Scott Ott said, that the CEO of a company has a duty to his shareholders. In fact, Mr. Sinegal is the former CEO, and while I'm sure he had some input, is was not completely his decision.
During the time Mr. Sinegal was CEO, his top salary was about 350K for a company that has close to 100 billion dollars in gross revenue per year. Compared to most CEOs that's a pretty paltry sum of money. As is the custom with CEOs, he also received stock options. When asked about his salary being so low during a TV interview many
years ago, his answer was something to the effect of, "You know, that's
still many times more than what my highest paid store manager makes. I think
that's more than enough."
I know Mr. Sinegal and I know how he runs his company. His employees are among the highest paid retail workers in the entire country. The cashiers top out at about $22.00 per hour, and other departments are even higher. The benefits are among the best, and employees also receive regular bonuses. Employee turnover is amongst the lowest in the business. Close to 100% of advancement is from within the company. Many a former cashier is now a store manager.
Respect for employees is a requirement of all management. I used to joke that Costco was the Post Office of the retail world because it was almost impossible to be fired. If you burned down a warehouse, they'd probably respond by paying for your therapy to cure your pyromania. After passing my third year of employment, my store manager couldn't fire me without having a regional president fly in to make sure I wasn't being treated unfairly.
Questions have been raised about Costco's use of eminent domain to obtain land for warehouses. In most of the cases it has been the cities themselves, in their zeal to obtain the tax revenue, that have abused eminent domain and not Costco. Location is not a big factor for this store. They don't need to be in a prime location to serve it's customers. The first warehouse I worked in was located in the most gosh awful downtown location with about the worst parking lot I've ever seen. It didn't stop anyone from going there. The replacement store they built, since the original was in an old truck warehouse, is essentially in a warehouse district and, in my opinion, a nightmare to access.
Do they seek to put others "out of business", as I often hear? Since the amount of merchandise in a Costco store is well below the amount in other big box stores, their presence is usually a boon for other retailers. For instance, if someone buys their flooring at Costco, they still need to buy a gazillion other things elsewhere to complete the job.
A Costco warehouse in a community provides upwards of a hundred extremely high paying jobs. It pays gobs in taxes to the local government, as well as donating untold millions to charity. It saves families money by providing high-end quality merchandise at rock bottom prices.
One day when I was working there, a member brought up the fact that Jim was building a new, rather expensive home. I'll tell you exactly the same thing I told this member. God bless Jim Sinegal. Without him, I wouldn't be one of the most overpaid retail employees in the country. Because of his vision and hard work, tens of thousands of high-paying jobs have been created. Because of him, communities all around the world have prospered. Because of him, people like you and I have access to some of the best merchandise in the world at prices we can afford. I think he should build himself two huge expensive homes, then buy a yacht, and a big airplane.
So why does Jim Sinegal support Obama? I really believe it's because he thinks all companies should operate like Costco and he really believes that most CEOs earn too much money. And about that 4 million tax windfall he's getting? I think it's no more than a consequence of his doing right by his shareholders. Trust me on this one; Jim doesn't need another 4 million and could probably care less.
So when people make statements like, "I'm cutting up my Costco card", try and keep in mind that the only people you harm are employees and the community that reaps the benefits of huge tax revenues. I feel the same way about Walmart. The majority of the people working at our local Walmart are happy to have the job. Do I think it would be nice if they operated like Costco? Sure. Thing is, if they did, it would no longer be Walmart.
I'm headed off to my little food demo job now. It doesn't pay like Costco, but heck, I'm surprised someone is willing to pay me anything for standing around chitchatting with people and handing out my homemade pulled pork. Just don't tell my boss I said that.