10.31.2008

All Hail Costco

The Motley Fool has an interesting article, All Hail CostCo that details some of the sharp differences between Wal-Mart and CostCo.
# CEO Jim Sinegal earns a mere $350,000 per year, with a bonus of as much as $200,000 (and possibly some stock). He aims to earn no more than three or four times what his highest-paid store managers earn. "Having an individual who is making 100 or 200 or 300 times more than the average person working on the floor is wrong," Sinegal has said.
# Costco pays its employees relatively lavishly. Workers reportedly start at $10 or more per hour, considerably more than elsewhere, where minimum wage is the usual starting point. According to a 2008 SmartMoney article, average pay topped $18 an hour, fully 68% more than employees earned at Wal-Mart's (NYSE: WMT) Sam's Club, and more than BJ's Wholesale (NYSE: BJ) employees earn, too. Roughly 85% of Costco's employees had health insurance last year (at fairly cheap rates), versus only about half at Wal-Mart and Target (NYSE: TGT). All this leads to low turnover, saving the company money on recruiting and training new employees, and helping Sinegal argue that it's simply a rational business practice.
How much did the Wal-Mart CEO take home last year? How many hundreds of times was that above the floor level grunt?

I shop at CostCo because the prices are good, the stores are well cared for, the employees are well cared for and it is a company I can feel good about supporting. How many of you shopping at Wallyworld can say the same thing?
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