At The Motley Fool, we often take companies to task, and for good reason -- there's a lot of bad behavior out there. So I think it's fair that we highlight some decent behavior as well. Costco (NASDAQ:COST) CEO Jim Sinegal and CFO Richard Galanti, come on down.
As we well know, the stock-option backdating problem is spreading ever wider, taking its toll on a number of companies and stocks. We've seen lots of CEOs, CFOs, and directors get fired or step down over the past few months, including executives at Apple (NASDAQ:AAPL), UnitedHealth (NYSE:UNH), and CNET Networks (NASDAQ:CNET).
And we've had some "improprieties," like the ones at Bed Bath & Beyond (NASDAQ:BBBY), go seemingly unpunished, as I wrote about last week.
That's why it was nice to read what CEO Sinegal and CFO Galanti had to say in an 8-K filed by Costco yesterday: ". each officer suggested to the Committee that he not receive a bonus this year."
Wait a second! They gave themselves a two-stroke penalty? The audit committee found no case of fraud, just "imprecisions" in the stock-option granting process. The committee said financial statements will not have to be restated. Yet these guys took responsibility for their role in these "imprecisions," and for the fact that an investigation had to be made, and suggested they not receive their bonuses.
What a novel idea! Executives should share in the spoils and be penalized for problems! Am I dreaming?
Costco isn't your average company. It's built around adding value for consumers and shareholders. And while its executives get paid well, their salaries are nowhere near the levels seen at other companies. So I think it's a big deal when the CEO and CFO volunteer to give up $200,000 and $82,000, respectively.
Actually, looking at the circumstances, maybe I shouldn't be surprised. With a Doberman like Charlie Munger, who's no big fan of compensation packages, staring back across the boardroom table, surrendering those bonuses was probably an easy decision on Sinegal and Galanti's part. But these guys handled it well.
As shareholders, we have to trust that executives will do the right thing when confronted with difficult situations, because we can't monitor every decision they make. It's just like the golfer who gives himself a two-stroke penalty when his ball moves as he addresses it in the woods, under some rough, and far away from his competitors. It's not always easy, but it's the right thing to do.
Kudos to Sinegal and Galanti for their honorable deed. I think it was a great example to set, not only for the business world, but for everyone -- and a very Foolish move indeed.
For more coverage on the options carnage, check out:
Costco, Bed Bath & Beyond, and UnitedHealth are all Motley Fool Stock Advisor selections. Click here to receive a new special report, absolutely free.
Bed Bath & Beyond and UnitedHealth are also Inside Value selections, while CNET Networks is a Rule Breakers selection.
Retail editor and Inside Value team member David Meier does not own shares in any of the companies mentioned. You can view his TMF profile here. The Fool takes its disclosure policy very seriously.
