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Wal-Mart has listed key executive compensation of around $63m USD this past year [http://insiders.morningstar.com/trading/executive-compensati...] and reported yearly revenue of $473,000m USD [http://finance.yahoo.com/q/ks?s=WMT].

I'd argue that spending 0.01% of revenue on key executive compensation (which is the 'paying executives millions' you talk about) is irrelevant to Wal-Mart overall and how much they can or can't pay their workers. Even if you stripped the executive compensation and gave it to the workers (2.2m of them), you'd only be handing out $30 to each person. That's a few hours of work total, and amortized over a year? Not a factor at all in the grand scheme of things.

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The article is well worth a read. It's interesting and insightful and discusses more interesting things like business models, target demographics, value-mindedness, etc. I recommend it if you can get it to load. (It was fine for me.)

That's $63m to just the top 6 executives. Total executive compensation would be far far greater. And for comparison, Costco paid its top 6 only $19m, which I think is the GP's point: http://insiders.morningstar.com/trading/executive-compensati... .

I don't know, seems pretty reasonable, Costco revenue is 105B. Walmart has >4x revenue, and 19m*4=76m, more than Walmart. Based on your comparison, Walmart is paying their executives fairly.

About as reasonable as getting 9 women to make a baby in 1 month. This would only be true if those 6 executives were doing 4x the work of the executies at Costco. Conservatively, they might be doing 1.5x or even 2x the work. But I doubt they are putting in 160 hours a week.

Brad Pitt doesn't make a movie 10x faster either, and he certainly doesn't do 10x the work. But he's paid 10x what many other actors are paid.

Is it reasonable? There's a lot of money to be made by the studio that can prove it's not by making consistent blockbusters without stars. But nobody has figured out how to do that yet, so Pitt keeps getting paid. Outcomes are what matter, not hard work.

EDIT: I realized there is a studio that makes consistent blockbusters without stars: Pixar. In a way, they're like the movie studio equivalent of Costco, since they figured out a way to make hit movies with far, far fewer (but much higher paid) laborers. But like Costco vs. Walmart, Pixar can't make all the movies that the other studios can make, so they'll likely always have to settle for a small chunk of total box office receipts.

Executive compensation in America is totally fucked up.

But it's not at all the case that the executives are "stealing pay" from the guy working on the floor or whatever other crazy rhetoric people are saying now.

If the CEO is stealing money from anyone, it's the shareholders, and for a whole bunch of reasons (good and bad) they have been unable to get a cap on that.

I think we're forgetting that the Walmart customer is not the Costco/Trader Joe's customer.

I would argue that Walmart pays minimum wages because they can and their customer base doesn't really value the benefits of paying higher wages and 'participatory management' - primarily lower turnover and thus more engaged/invested employees who deliver better service and higher productivity. Walmart most likely sees their employees as replaceable and the average Walmart customer is driven by low prices and not great customer service. To that end, the lower the Walmart cost structure, the more margin they have to work with to stay competitive (without having to lower CEO salaries, etc. of course).

Costco and Trader Joe's are known for great customer service and easy return policies. Based on my observations, people who shop at Costco like to save money, but it's from a best value angle and not from an absolute cheapest I can get angle. The Costco consumer has to be willing to shell out an annual membership fee up front and you're buying in bulk which means you have to be able to pay for goods you use in the future. Trader Joe's wants to be the neighborhood store and that means they need happy employees, not employees who are thinking about how they're going to pay for the knee surgery they badly need.

I'm probably making broad generalizations of the different customer bases here but it's what I've personally observed.

>> I think we're forgetting that the Walmart customer is not the Costco/Trader Joe's customer.

I would say the same for the employees. Your average Walmart worker would probably be washed-out in a shift or two at Trader Joe's. Everyone at TJ's is busting their ass, Walmart employees seem to just be standing around doing nothing but talking to one another.

I wonder if it's because the jobs at TJ are so coveted that employees know if they don't bust their ass, someone will happily take their position? I feel the same way about In-N-Out which pays above market, people there always seem to try a bit harder to be pleasant and helpful.

You get what you pay for. With competitive pricing, you can fire someone and immediately get a high-quality replacement.

Walmart, on the other hand, seems to scrape the bottom of the barrel with their employees. As long as the employees show up to work on time and don't steal merchandise, they're good.

> I wonder if it's because the jobs at TJ are so coveted that employees know if they don't bust their ass, someone will happily take their position?

Yes, it's known as paying "efficiency wages." Which is mentioned in the article.

The article suggests that TJ's limited SKU count and upscale clientele allows it to pay efficiency wages. Whereas Wal-mart has a massive SKU count and a lower-end customer base.

Walmart owns Sams Club which is equivalent/competitor to Costco.

Which makes this article seem ingenuous. Why not just compare Sams Club to Costco?

Perhaps because Walmart is the parent company?

This is so wrong that I just have to laugh. Yes, Costco DOES pay its executives millions.

http://insiders.morningstar.com/trading/executive-compensati...

Can you name one Fortune 500 company that doesn't pay executives millions? Facebook, Google, and Apple pay its executives millions, and yet its contracted janitors get low hourly rates. Where's your rage?

I think you are missing the forest for the trees. The point is that costco's approach reduces the "spread" between management and employees, not that it eliminates it.

From moringstar, Costco CEO's compensation was ~$18.5M, Walmart's was ~$62.5M.

In 2006 (the easiest numbers I could find) the average Walmart employee earned ~$10/hr vs $17/hr at Costco. Walmart employees also had less health coverage (<50% vs ~80%) and were responsible for %33 of the cost vs %8.

source: The High Cost of Low Wages - Harvard Business Review.

http://hbr.org/2006/12/the-high-cost-of-low-wages/ar/1

The article you cite is not a peer-reviewed journal paper.

Apple's head lawyer alone made $68 million last year, not to mention other executives. No outrage?

I don't think peer review is necessary to confirm the relative levels of compensation as stated by the article. If you think those numbers are not accurate you are welcome to cite other sources for the wage levels.

As for bringing up Apple, are you trying to make me defend Apple? I'm no fan for a whole host of reasons, red herrings though they may be.

How many Apple employees are on foodstamps and/or medicaid?

Including the Chinese workers who assemble Apple's products?

Last time I looked up the numbers, those workers were earning at least an integer multiple of the average wage for China, and were right about where you'd expect for someone in Shanghai (a highly privileged part of China).

If you really think they're equivalent to Wal-Mart's minimum-wage employees, you are either extremely ignorant or just delusional.

Holy shit. I can't believe I just read that. I shall forever this moment as the one where HN jumped the shark. God damn.

> Last time I looked up the numbers, those workers were earning at least an integer multiple of the average wage for China

Underneath the pompous attempt at technical-sounding language, what are you trying to say?

If you really meant "...at least an integer multiple of the average wage...", this is a really pompous way of saying "some amount, which could be infinitely negative", since integers include negative numbers of unlimited magnitude.

If you really meant "...at least a positive integer multiple of the average wage...", that's a really pompous way of saying "...at least the average wage..."

If you really meant "...at least an integer > 1 multiple of the average wage...", that's a really pompous way of saying "...at least twice the average wage..."

"Integer" is neither pompous nor technical-sounding. Your entire comment is just a really arrogant way of saying "I'm a pedantic jackass".

> "Integer" is neither pompous nor technical-sounding.

I didn't say that "integer", standing on its own, is either pompous or technical sounding.

My criticism was that, as written, the sentence is actually completely meaningless ("X is at least an integer multiple of Y", where X and Y are from context real-valued measures, means, after all, doesn't actually provide any bound, lower or upper, on X), and that for any conceivable meaning that could have been intended, and that, given the word choice and the way the general structure was overly convoluted for any of the conceivable meanings intended, appeared to be a pompous attempt to use technical-sounding terminology rather than simple direct statements that would clearly communicate the intended meaning.

I notice that you still don't say what it is you actually meant by the completely meaningless phrase you used.

I meant your final interpretation, but you already knew that, as would anyone else reading my comment.

Absolutely no one who genuinely wants to address a linguistic ambiguity opens with calling it "pompous". There is simply no way you were acting in good faith.

You just wanted an excuse to be a jerk.

> I meant your final interpretation, but you already knew that

No, I didn't. My actual belief was that the last two were about equally likely, with a slight favor to the first over the second, and that it was about as likely as either of those two that you meant something else that I hadn't thought of, given how unnecessary the whole qualification was for the second interpretation, and how distant the third was from any reasonable (even considering understandable mistakes in word choice of the type that could support the second interpretation) relationship to the words you actually used:

* The first interpretation I assumed to be unlikely because it was completely meaningless (but I didn't consider it impossible that you were knowingly making an empty statement.)

* The second I thought was plausible because using "integer" in place of "natural number" or "positive integer" is a fairly common error, this would obviously be the interpretation of the three presented with the most excess verbiage, but of the non-empty ones it was the easiest mistake of word choice to understand.

* The third involves a bizarre, nearly inexplicable, error of meaning -- I've literally never before seen anyone use "integer" to mean "at least two" and can't see any reason why anyone would expect anyone to understand "integer" to mean that -- but provided some explanation of why you'd have any phrase modifying "average wage" at all.

"Integer multiple" in relation to "wage" combined with the mention of being in line with Shanghai wages is clear in its intended meaning. And I still don't believe a word of your BS because you opened with an insult, eliminating any possibility you are acting in good faith.

By the way, the "inexplicable" becomes a lot more explicable when you allow for the possibility (in this case fact) that the writer was suffering extreme exhaustion at the end of an incredibly long day.

Why not just apologize for being a jerk and move on?

What about the chinese workers that assemble products sold at walmart?

I am not sure why anyone would want to be an executive, unless one gets paid millions. Executives work crazy hours, travel all the time and don't see their families. Who would want to do that, if not for the millions ? Sure, some would, but not many

If you're working as an executive for the millions you're doing it wrong. The millions you get paid as an executive are what enable you to work crazy hours; you can afford a maid and a cook and a nanny so that your ability to work isn't impeded. There are some perks like a nice car and a big house or whatever. But fundamentally that pay is because you bring a lot of value to the company and it needs your hours desperately. It will pay to make most/all distractions disappear.