US CEO making seven-figures tells staff worried about bonuses to leave pity city

The head of the upmarket furniture-maker MillerKnoll Inc, known for its iconic Herman Miller office chairs, is under fire for telling employees to leave “pity city’’ and stop asking about bonuses.

Those words by Chief Executive Officer Andi Owen have provoked criticism on social media – and they may soon come back to haunt her as Owen’s own pay package for the current period is likely to be disclosed by August.

The prior financial year she was awarded a salary of roughly US$1 million, in addition to about US$4 million from mostly stocks and options, an annual incentive plan, and covered expenses, like access to a company plane.

Compensation is a hot-button topic for both employees and executives, especially when the economy is going through a rough patch, said Tony Guadagni, a senior principal at consulting firm Gartner Inc.

Scrutiny over executive pay levels is intensifying as surging inflation hits household budgets and the US experiences wide-scale staffing shortages, which has emboldened many employees to push for higher wages.

“I think in a time like this, where the news cycle has been dominated by inflation for 18 months, where employees feel their pay cheques not going as far as they used to – organisational leadership would be wise to be sensitive to that,’’ he said.

The 90-second leaked recording captures Owen chiding staff at the end of a 75-minute internal company meeting for speculating too much about the annual bonus payouts.

“Spend your time and your effort thinking about the US$26 million we need, and not thinking about what are you going to do if you don’t get a bonus,” Owen said in the video, referring to an internal metric.

“I had an old boss who said to me one time, ‘You can visit pity city, but you can’t live there’. So, people, leave pity city.”

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Following the meeting, Owen sent an email to staff and met leaders across the company to address their concerns, according to a person familiar with the situation.

“Andi fiercely believes in this team and all we can accomplish together, and will not be dissuaded by a 90-second clip taken out of context and posted on social media,” MillerKnoll spokeswoman Kris Marubio said in an emailed statement.

The worry by staff at the Michigan-based company over a possible shrinking bonus pool comes amid a drop in sales at MillerKnoll this year as businesses pulled back on spending.

Companies are downsizing their real estate footprint as many workers continue to work remotely after the pandemic, dampening demand for office furniture.

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Other CEOs’ salaries have been in the spotlight in recent months in the wake of mass lay-offs. Some, like Goldman Sachs’ David Solomon and Morgan Stanley’s James Gorman, have already accepted pay cuts, while others have yet to report their most recent compensation packages.

Though CEOs make around 300 times the average employee, only about a third of the rank-and-file polled by Gartner thought the wage disparity was unfair.

But as economic anxieties grow, there’s a chance that employees may become increasingly sensitive to the difference in their pay and those in the C-Suite, Guadagni said.

“I wouldn’t be surprised if we start to see the tide turn on that a little bit, especially depending on what happens to the economy in the next six to 12 months,’’ he said.

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