Annual Meeting: May 25, 2022

Total reported compensation for Dollar General CEO Todd Vasos was $16,618,873. Two things stood out to me as I reviewed the proxy statement for Dollar General. One is an unusual perquisite that comes in addition to an already generous pay package, and the other is a change the company made in the way they measure median pay.

In 2021, Vasos received $215,859 in “aggregate incremental cost of personal airplane usage.” The use of corporate planes for personal travel used to be more common. Many companies have removed or limited it given shareholder disapproval of the practice. The general cost of the plane (insurance, fuel, pilot, etc.) is borne by the company but anything extra is considered a perquisite. Most of what the company lists as part of its calculation is standard for those companies that maintain the benefit “using costs we would not have incurred but for the personal usage (including costs incurred as a result of ‘deadhead’ legs of personal flights), including fuel costs, variable maintenance costs, crew expenses, landing, parking and other associated fees, supplies and catering costs.” But Dollar General adds a clause I’ve never seen before “as well as charter costs when charter usage was necessary because our plane was unavailable.”

In other words, if the company plane isn’t available – presumably because it is being used for company business – Dollar General charters a plane for its CEO. The CEO then uses the plane, at least in part, for personal trips. A review of other company proxies (using the SEC’s EDGAR full text search) showed that no other companies have provided this benefit in the past year.

This seems particularly egregious at a company where the median employee last year made less than $20,000. The company reports that the compensation of “median compensated employee . . . was $17,773; our CEO’s 2021 annual total compensation was $16,618,873 and the ratio of these amounts is 1:935.” There may be room for debate on the ideal pay ratio. Some shareholders vote against when the ratio is more that 1:100. Others vote against pay packages when the CEO pay exceeds 50 times the median household income. Most shareholders do not disclose an absolute limit, though they take it under advisement. A ratio of over 900 certainly seems unconscionable.

The company recently changed how to determine its median employee compensation. I suspect true median pay may be even lower than $17,773. The company took its pay figures and then “annualized for those permanent employees who did not work for the full year.” We have no way of knowing what the turnover rate of Dollar General’s 153,024 employees is, but I expect this calculation makes them look better paid. It is particularly problematic in a time of COVID. An employee who needed to leave work for illness or to care for an ill family member in June and could not return is calculated as if that employee worked through January 22, 2022 (the end of the company’s fiscal year).

A recent study reported that 22 percent of Dollar General employees are paid less than $10 per hour. An employee working at that rate would need to work 21,585 hours – about ten years of working forty hour weeks – to make what the CEO received in just this personal use of aircraft perquisite.