August 16, 2001
The AFL-CIO has initiated the “Executive PayWatch” Web site at www.paywatch.org. This site show working families how much their bosses made last year, how bosses’ pay compares with workers’ and what working people can do about it. Check it out!–and check out our own CEO paycheck feature on this Web site each week. You’ll learn plenty about how top corporate executives are helping themselves.
News this week…
A HARD LESSON IN THE HARDWARE BUSINESS: TRUSERVE CEO SCREWS UP COMPANY,LEAVES WITH $417,500 BONUS
Ever buy tools or housewares at a True Value Hardware Store? All of us have, and most of us have gotten decent merchandise at a decent price. Walk into the store when a big promotion is going on and you might even make out with a special one-time deal.
But most of us are never going to get a deal quite as special as the one Donald Hoye got when he recently resigned CEO of TruServe, the purchasing co-op owned by TruValue’s franchisees. According to a story by reporter Susan Chandler in the August 2 Chicago Tribune, Hoye resigned July 3 leaving TruServe “in turmoil,” yet the board awarded him a $417,500 bonus on leaving.
“The Chicago-based hardware buying cooperative had defaulted on its debt in February,” Chandler wrote. “Its auditors were preparing warnings about TruServe’s future. And a year earlier, a new chief financial officer had uncovered more than $100 million in accounting errors that wiped out an annual dividend to the True Value Hardware store owners who are TruServe’s shareholders.
“But none of that prevented Hoye from receiving a $417,500 bonus last year in addition to his $500,000 salary,” Chandler wrote. “Hoye and four other top TruServe executives merited ‘special recognition’ because of ‘the company’s increased service to members,'” the company said in a 10-K document filed late with the Securities and Exchange Commission.
“TruServe officials could not be reached for comment” when the Tribune reporter tried to contact them, and a company spokeswoman refused to comment when she was reached. But auditors Pricewaterhouse Coopers earlier issued an opinion that TruServe’s finances were in such an advanced state of distress that there was “substantial doubt about the company’s ability to continue as a going concern.”
Chandler said TruServe’s lenders have given it an extension on its debt until September 30. “But,” she noted,”that leeway didn’t come cheap. A group of bank lenders increased TruServe’s interest rate by 2 percent, which would increase its debt service payments by $6 million by the end of the year.” She said that to raise money the co-op may be forced to sell off its paint factory in Cary, Ill., which is running at only 50 percent of capacity.
There was no mention of whether anything else would be sold off to raise money in a hurry, but keep an eye on the advertising inserts in your Sunday paper. Don’t be surprised if your local True Value suddenly starts offering some really great discounts. And when it does, don’t forget to thank Donald Hoye.