Executive pay rises even when performance is poor

Title: Safeway Rewards 11 Top Execs
Source: LA Times
Date: January 26, 2004

From the article:

Safeway Inc. recently awarded 11 senior and executive vice presidents millions of dollars in stock grants and options under a new compensation plan that is drawing fire from labor leaders and others....

There have been questions about the timing and the appropriateness of the move to reward upper management, given the company's declining profitability and its demand that the next contract with workers in Central and Southern California institute a new tier of lower wages and less attractive benefits for new hires....

In December, eight senior and executive vice presidents received grants of restricted stock. The 409,352 shares were worth nearly $9.4 million at Friday's closing price of $22.95. The eight officers can sell the shares in 25% increments over the next four years.

All 11 of the vice presidents received a total of 672,865 shares of stock options at a strike price of $20.15, 12% below the current trading price. They can each exercise 20% of their options each year for the next five years....

Profit is down, employees are being laid off and asked to take lower pay, while executives get bigger bonuses. That is the classic profile for the concentration of wealth.

Why not give all of that stock to employees? Or sell the stock (rather than giving it to executives) and use the proceeds to reduce prices for consumers? Why not force executive pay downward in the same way that employee pay is forced downward?