Peoples Drug Stores executives are the highest paid in the chain drug store business, a stockholder complained yesterday at Peoples annual meeting.
In the past five years, the total compensation paid Peoples management team jumped from $427,000 a year to $1,296,000, charged Ido Colantuoni.
During the same time, the average Peoples executive salary increased from $21,000 to $62,000, compared to an industry average of $43,000, Colantuoni said.
An economist for the Export-Import Bank who said he owns stock in 20 retail drug chains, Colantuoni said he had compared Peoples' pay to that of the other chains.
Peoples president Sheldon Fantle, the stockholder noted, earns $275,000 a year, more than twice the industry average of $128,000 for chief executives.
Colantuoni barraged the drug chain's management with questions about their compensation, which he termed "the highest direct remuneration in the retail drug industry."
He demanded to know why salaries had climbed so fast, how executives justified the pay in light of Peoples' cost-cutting plan, what some executives did to earn their money and whether Mrs. Fantle had use of a chauffeur-driven company limousine.
Colantuoni passed out copies of his complaints to the Peoples board of directors, but said he would not give them to anyone else without the permission of Peoples executives. Fantle refused to reporter's request for a copy of the stockholder's criticisms.
Saying it would be "inappropriate for me to defend my salary," Fantle turned that topic over to Peoples board chairman Adrian C. Israel.
"The answer is very simple," Israel said. "The board of the company has endeavored to get the best available people."
Fantle said salaries are "not out of line - commensurate with the talent we are getting." He said Peoples' had to pay too dollar to get executives who could turn around the company.
"It's a lot easier to run a young company than to redo an old one." Fantle said, comparing Peoples with the Great Atlantic and Pacific Tea Co. "A&P" is very, very similiar to our situation."
Saying his company Corvette was too small for a chauffeur, Fantle conceded, "We do have a man in this building . . . and occasionally he does things for my wife."
Colantuoni also asked what Edward Schuman does to justify his nearly $80,000 a year salary as a senior vice president. Schuman, who is past 70, is a director of People but did not attend the annual meeting.
Fantle said Schuman "has a contract" with Peoples but "will assume lesser responsibilities" this summer and "lesser remuneration."
Before the lengthy digression on ex-executive pay, Fantle outlined Peoples efforts to improve profits - $4.5 million on sales of $366 million last year.
Since September, when the fiscal year started the company has opened 7 new stores and 17 more are scheduled to be opened, Fantle said. Five stores will be closed because "return on investment is not acceptable," he said, yielding a net gain of 19 units to 394 by next September. In contrast, the company closed three more stores than it opened last year, he noted.
Eight of the new stores will carry the Peoples name in the Washington-Virginia area, said James Kane, vice president for real estate, and Richard Schuman, VP for People's division.
The new Peoples stores include three in Tidewater, Va., and others in Charlottesville, Arlington, Alexandria, Fredericksburg and Fairfax.
The Arlington store, on Williamsburg Boulevard, is the prototype for Peoples planned expansion into combination drug and convenience stores, said Fantle.
Schuman said some Peoples stores are bigger than they need to be, making it impossible to get the sales per square foot the chain wants. The solution at Arlington was to convert 3,000 square feet of the 13,000-square-foot store to a convenience food store, using outside vendors to supply meats, dairy products and other food items not carried in other Peoples stores.
Schuman said the average drug store shopper visits the store 1.5 times a week, compared with three times for the average supermarket customer. "If we can increase the frequency of visits to two, our dollars per square foot would increase substantially," he said.
He said Peoples will continue to experiment with the convenience-drug store combinations, but is not committed to converting all its stores.
Fantle told stockholders they could expect "substantial savings and increased efficiency" next year from consolidation of the company's half-dozen drug chains.
Remodeling of additional stores, restructuring of the company's distribution centers to cut labor costs, and creation of a new computerized ordering system are other efforts under way to improve the chain's operating profits, he said.