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 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 3:14PM
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It's so easy to find lavishly compensated CEO's of dying companies. Not a day goes by without a story like this. The worker bees get laid off while the executives plunder the carcass. The workers go to their friends sofas, the CEO's go to their private islands. But who am I to question American Capitalism?
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 4:16PM
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Too many CEOs sit at the helm for a few months and have no legitimate interest in the company itself, then suck the company dry and walk away.  Money is their interest.  Companies should make CEOs prove themselves before doling out huge paychecks and compensation packages.  Capitalism isn't what it used to be...when hard working people could get ahead, instead they get taken advantage of.  And, the bigger the company the worse it is for the employees to make a decent living.  But, smaller companies have a hard time competing with bigger companies - it's a no win situation.  The rich get richer, and the poor get poorer.  

Mar 21, 2012 5:17PM
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Corporate greed is the downfall of this country !!!!
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.  
Mar 21, 2012 4:00PM
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That's all these top people are doing is ripping off the hard workers at SEARS to fatten there personal wealth.

 If it weren't for the workers they would have nothing.

They are going to close it down when they can't get no more.

 They could care less about the workers.

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 6:07PM
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Sad these "executive" can drive the company into bankruptcy...

 

Mar 21, 2012 4:34PM
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You don't give a failing company CEO perks for losing money.I would fire him and bring in a more agressive Ceo.
Mar 21, 2012 5:05PM
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This is an example of why the country is going downhill.
Mar 21, 2012 3:53PM
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Getting paid to drive a business in the ground. What a unique story.

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 4:11PM
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What I want to know is what in the hell is he doing to earn that much money??? No one person should earn a salary that large, I don't care what he does.Especially if the company is in dire straits and is letting employees go due to store closings. He's making plenty, let him pay for his own damn transportation!
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 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 4:12PM
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They deserve to go under.  If the Board and shareholders can't hold the CEO's feet to the fire for its problems, then they all deserve to go under.
Mar 21, 2012 3:16PM
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Good OLD' America.......the land of the great. What is it the the CEO does to "EARN" so much? He does all the corporate junk.....Oh!, boring meetings, boring confenrence calls, boring board meetings. Poor CEO has to go to "WORK" but hey at least he gets to go home to his Island. Right?

Mar 21, 2012 3:36PM
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