Costco Wholesale Corp. said its CFO and CEO declined their bonuses for 2006 in an effort to acknowledge their ultimate responsibility for the company’s misdated stock options.
The retailer said in a regulatory filing CFO Richard A. Galanti would have been entitled to an $82,000 bonus while CEO James D. Sinegal was in a position to receive a $200,000 bonus.
The company previously disclosed that a special committee of the board of directors concluded that there were “imprecisions” in the company’s stock option granting process and that “these two officers had responsibility for administering that process.”
“Because of their responsibilities for the imprecisions in the process and the resulting need for the board inquiry, these officers suggested that they not receive bonuses for fiscal 2006,” the company said. The announcement added that chairman Jeffrey Brotman was awarded a $200,000 bonus.
Back in 2002, Galanti earned a rare plaudit from veteran compensation expert and gadfly Graef Crystal, who dubbed Galanti one of the 10 most underpaid CFOs from 1998 to 2001 — a period when executive comp soared.
Last year, Galanti, who receives a higher salary than his boss, Sinegal, earned nearly $3.3 million in 2005, including more than $2.7 million from exercising options.In 2005, Sinegal took home more than $4.2 million, including more than $3.7 million from exercising stock options.
In 2004, Sinegal received $450,000 in salary and bonus while Galanti received $537,000 in salary and bonus.
And in 2003, Sinegal earned another $1.5 million from exercising options.