The Motley Fool's readers have spoken, and I have heeded your cries. After months of pointing out CEO gaffes and faux pas, I've decided to make it a weekly tradition to also point out corporate leaders who are putting the interests of shareholders and the public first and are generally deserving of praise from investors. For reference, here's my previous selection.
This week, we'll take a trip overseas and highlight the incredible generosity of Next (LSE:NXT) CEO Simon Wolfson.
Kudos to you, Mr. Wolfson
It has been a pretty ugly past week across the sea in the United Kingdom. Credit ratings agency Fitch downgraded the U.K.'s credit rating to AA+ last week following a growth forecast reduction to just 0.6% this year from the Chancellor of the Exchequer. It's proof in the pudding that Europe's debt problems won't exclude Britain, and that growth in the region will come at a premium for potentially the next couple of years.
Despite these woes, Simon Wolfson's Next, the largest department store chain in the U.K., and the second-largest apparel company in the U.K, has excelled. In late March, Next reported that its pre-tax profits grew 9%, which topped analysts' projections by approximately $2 million. Furthermore, analysts in the region estimate that Next is taking market share from its rivals by carefully balancing the sale of discounted merchandise with full-priced items. Given that the pound has fallen against the U.S. dollar this year, it's allowed Next to refrain from raising its prices and given shoppers even more incentive to purchase apparel and other household goods.
A step above his peers
What makes Wolfson truly exceptional -- beyond just the fact that his company has outperformed in a sluggish growth environment -- is a gesture made last week that has only been seen one time before from the CEO of a large corporation.
Wolfson, who received a $3.6 million performance-based bonus, decided to do exactly what Lenovo CEO Yang Yuanqing did last year, which was to share his $3 million bonus among 10,000 employees. According to the math, Wolfson's gifting of his entire bonus check to employees works out to a net gain of 1% on top of their salary. In Wolfson's own words, according to an email sent to employees and obtained by The Daily Telegraph, the bonus was "a gesture of thanks and appreciation ... for the hard work and commitment you have given to Next over the past three years and through some very tough times. I remain very grateful for the way in which everyone has helped to navigate our business through this recession."
Now compare this to some of the exorbitant pay packages that my Foolish colleague Alyce Lomax touched on, and you'll better understand why Simon Wolfson is truly exceptional.
Take J.C. Penney, for instance, which has been in a multiyear accelerating downward spiral. Yet when Ron Johnson was initially hired, he was gifted 1.66 million shares of J.C. Penney stock (at the time worth nearly $53 million)! Another prime example is former CEO Trudy Sullivan of the now-private Talbots, who took home more than double the salary in 2010 that she did in 2009 in spite of her company's losses ballooning.
Two thumbs up
News of Wolfson's generosity has spread rapidly throughout the U.K., with public pressure being placed on other CEOs to do the same for their employees. While it's a great gesture indeed, bonus-sharing alone hasn't made Wolfson a great CEO -- it merely put him on everyone's radar. His company's promotion of direct-to-consumer services all while avoiding big discounts and tightly managing inventory levels is the reason he's a great CEO. If you haven't heard about Next or Simon Wolfson before, I suggest you read up, because he's certainly an incredible CEO who's running a growing retail chain.