Ailing Sears blows a fortune on its CEO

The company spent nearly $800,000 on chartered flights for Lou D'Ambrosio last year. It also spent $30,000 on temporary housing for him -- and even paid some of his taxes.

By Kim Peterson Mar 21, 2012 2:16PM
Image: Paper airplane made of money (© Tetra Images/Corbis)Sears Holdings (SHLD) is closing as many as 182 stores in an effort to save money. But it has no problem shelling out for plane flights for its CEO.

The company spent nearly $800,000 last year flying CEO Lou D'Ambrosio on private flights for his commute between his Philadelphia home and Sears' headquarters in Hoffman Estates, Ill. It also spent $30,000 on temporary housing for D'Ambrosio in Hoffman Estates and more than $10,000 on ground transportation and company-furnished vehicles.

Some of those perks classify as compensation for D'Ambrosio, and he would normally have to pay taxes on that income. But Sears took care of that, paying $18,200 in "tax gross-ups" on D'Ambrosio's tax bill.

D'Ambrosio became the CEO in February 2011 and received $9.9 million in total compensation last year, The Associated Press reports.

One analyst says in the following video that Sears is asking customers to pay for a poorer shopping environment than what competitors offer.

Post continues below.
All of this is disclosed in the company's proxy statement, recently filed with federal regulators. And it's up to shareholders to decide whether they feel comfortable with that level of spending. Since 60% of the company is owned by one person -- billionaire investor Eddie Lampert -- I'm sure there will be no issue with D'Ambrosio's flying the super-friendly skies.

Speaking of Lampert, he's about to buy a $40 million home on a semi-private island off of Florida's Biscayne Bay, The Wall Street Journal reports. The 17,000-square-foot home has seven bedrooms and is set on 2.7 acres.

Sears is no longer profitable. Annual sales have fallen 20% since fiscal 2006, the AP reports, and its earnings before interest, depreciation and amortization has plunged 92%.

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Tags: SHLD
51Comments
Mar 22, 2012 8:41AM
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typical Retail! Hiarchy plunders and the store workers pay the price!
Mar 22, 2012 3:31AM
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If Mittens does not defeat Mr Obama, Sears is a great employment opportunity for him. 

These people will continue to rape our economy through nepotism and privilege. Only the tax rates of the Eisenhower era can stop this arrogant madness. A very good movie for the wealthy in this country to watch on their home theaters would be Dr Zhivago.

IF ANYTHING GOES; ANYTHING WILL!
Mar 22, 2012 1:24AM
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Well it is just that type of thing that is causing Sears downfall and when a company spends money no one outside of the top executives really feels bad when it fails.


Mar 21, 2012 11:17PM
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As an investor, I do my best not to engage in business activities where the CEO is stupidly overpaid. I shop at Costco because I like their business model and they have good products. Sears and Kmart? No way. IT is too bad because I like Lands End (another Sears company) but I will buy at LLBean instead. We, the people, can make choices and  with our pocket book can remove these unscrupulous CEO's from their posts (If we don't buy from these companies they will not have the money to pay outrageous salaries to these CEO's)
Mar 21, 2012 10:10PM
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Sick, sick, sick...totally unfair.
Mar 21, 2012 9:57PM
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You are a fool to shop at Kmart or Sears.  A simple review of their financial statments reveals their operating gross profit margins ( retail prices) 4 to 5% higher than competitors, and inventory turns is less than half.   What does this mean?  You are paying very high prices for old stale merchandise, in old outdated stores. 

The sooner both these chains go out of business the better off the country will be.  Let some good operators have the space.  If you happen to shop there,  check the expiration dates on anything perisable...it is probably outdated or short-dated.  If they advertise something new or fresh when you go there they will not have it.  May they die a quick death, stop the lingering pain of the slow process Kmart and Sears has followed in the past decade.

Mar 21, 2012 7:53PM
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Sears is one of the worst stores ever.  My mother bought a frig  this weekend. After she picked out a model she was told it could be delivered that day, the the saleswoman couldn't find it in stock. The salesperson couldn't call another store to see if they had it. Their computer system is soo outdated they cant talk to other store. I can get more info from sears on my cell phones than they could. Sears is doomed!
Mar 21, 2012 7:42PM
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Worthless CEO's such as this and Unions are going to be our death.  While the everyday working man sinks lower and lower,  these two classes enjoy living we can only dream of.
Mar 21, 2012 7:33PM
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Another case of corporate greed ruining a company.  I'm sure that Eddie Lampert has worried himself sick over the smaller shareholders.
Mar 21, 2012 7:16PM
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are we going to bail out a billionare that ran a company into the ground?
Mar 21, 2012 7:04PM
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CEOs are out of control with their wages. They're raping everyone. Sears deserves to go under.
Mar 21, 2012 6:39PM
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See, this is why Sear's is almost out of business and he's not bringing in no new revenue...  And that my friends is why I don't shop or enter their stores anymore.  Just think, a lot of us grew up wearing  Sear's brands. On the last day before they close the doors for good I might come in and make a purchase then. Smile
Mar 21, 2012 6:32PM
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How much money would the company be worth if it didn't waste it's money on an executive that obviously doesn't give a sh** about the company that's paying for all his perks ?
Mar 21, 2012 6:28PM
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Sears used to sell quality, long lasting products at a reasonable price some were even made in the USA.

 Now they sell Chinese and Mexican disposable products at a exorbitant price. Who knew that could hurt a business. Might as well go to walmart huh?

Mar 21, 2012 6:26PM
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Sounds like Obama at the White House.....
Mar 21, 2012 6:07PM
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Sad these "executive" can drive the company into bankruptcy...

 

Mar 21, 2012 6:01PM
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The problem is that corporations don't really fit into what we consider capitalism.

Capitalism is based on free market principles, such as competition and risk. In a small business (single proprietor), if your business fails you fail. You can only make money if your business is successful.

In corporations, executives are shielded from economic and legal realities. If a company loses millions, the CEO still gets paid. If the company is sued for millions, the CEO still gets paid. Nothing short of insolvency can disrupt the CEO's paycheck. But the CEO will see this from afar, and glide away on a golden parachute.

But if a company is wildly successful, executives do cash in big time. So they get a fixed reward no matter how badly they fail, but get a much bigger reward if they succeed. This encourages them to "swing for the fences" and take wild risks.

If you want CEO's to act reasonably, you have to make their fortunes swing in parallel with their corporations. But nobody would have the guts to make this happen. Investors want them to swing for the fences. They want the next Apple or the next Google. Good luck.
Mar 21, 2012 5:39PM
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Get off your Republican and Democrat high horses. Both parties created this mess. I can't believe the voters are so stupid. In November 95% of the voters will vote the same as in 2008. Because of that there is no hope. I vote for neither party. No common sense, no ambition, and no pride is what we have now. Or as the Penn. Governor put it "We've become a nation of wussies".
Mar 21, 2012 5:28PM
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Why run a profitable company when you can just file for bankruptcy over and over. Borrow a billion, lose your as, refinance your debt and get half of it forgiven, now you just profited 500 million. The RE tycoon in NYC plays that game better than anyone. Never ran a profitable company in his life.
Mar 21, 2012 5:27PM
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That's the problem with these companies that are closing locations and making people lose their jobs. All for the big CEO so he lives a life of luxury. Shame on Sears and any other company that lets this happen. 

Of course, the big decisions are made by the man on top and he is not about take anything away from his paycheck. He would rather let everyone else go hungry while he jets around the country and lives the life of luxury.  
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