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Grocery pay gap hard to swallow fruit

By MARK ALBRIGHT
Published June 21, 2006


Marc Rodman's blood boiled when he heard Albertson's chairman and chief executive Larry Johnston got a $105-million golden parachute after selling the nation's second-largest grocery chain in pieces.

Johnston's payoff capped five tumultuous years at the helm of Albertson's Inc. In contrast, Rodman, a onetime store produce manager in Bradenton, has spent a decade fighting for $25,000 in unpaid overtime.

Albertson's agreed six years ago to settle his case with thousands of similar claims in a suit filed on behalf of department managers in six states.

Nobody's seen a dime yet.

"Johnston walked off with enough to pay us everything ... and still have a lot left,'' said Rodman, 59. "How can anybody be worth that much?''

Granted, this is not apples and oranges. But the contrasts in this tale of two employees are striking.

A Jack Welch disciple who once headed GE Appliances, Johnston was lured into retailing to return Albertson's to greatness. He performed his Six Sigma magic, carving a couple of billion dollars out of Albertson's annual expenses. He led the company through a labor dispute in California that cut worker benefits to supposedly make the chain competitive with Wal-Mart.

When the dust settled, Johnston decided Albertson's still was not efficient enough to become the nation's No. 1 or No. 2 grocery store chain. So he sold the pieces to Supervalu Inc., CVS Corp. and a private equity group led by Cerberus Capital Management, which ended up with 96 Florida stores. That won him an $8.8-million bonus.

In contrast, Rodman toiled six years running a 10-person produce department rated among the company's best. It was tedious work. Four semitrailer truckloads of fruits and vegetables arriving weekly had to be washed and stacked by 8 a.m. daily. Every displayed piece had to be thumped, squeezed or eyeballed at least once daily to see if it was too ripe.

It was a six-day, 48-hour workweek. Overtime was out. But thanks to a bonus system based on allegedly unrealistic performance goals set for Albertson's produce departments, he was compelled to work off-the-clock. If he didn't, he would be gone.

Like many retail managers handed titles but paid by the hour, Rodman got a bonus if he kept department labor costs low. For him, that meant seven-day, 70-to-90 hour workweeks doing what needed to be done himself. In good years, the bonus added $10,000 to his $33,000 pay. Albertson's would have owed him twice that if he was paid time actually worked. "Every day I had to punch out, then keep working, sometimes 18 hours straight,'' he said. "Customers asked if I ever had a day off because I was there all the time.''

Fired after workers accused him of running a verbally hostile workplace for women, Rodman sued. He was a named plaintiff in a class-action suit filed in 1996 seeking unpaid overtime denied to 500 Albertson's produce managers in Florida because of the bonus scheme. The case was combined with seven similar ones and moved to federal court in Albertson's hometown of Boise, Idaho. Attorneys figure the scheme gave the chain a competitive edge that shortchanged its own workers hundreds of millions of dollars a year.

Johnston's big payday came on top of $60-million earned his first four years at Albertson's even as the company's stock slumped. About 35,000 employees lost their jobs before he left Albertson's with $6-billion in debt piled up by acquisitions that have since unraveled. Johnston's four top lieutenants split $64-million from the sale.

Meantime, Rodman's case muddles along with no end in sight. The company budgeted $37-million to settle the case six years ago, $17.5-million of it for lawyers.

Since then, 6,000 managers filed claims. But only 1,080 have been verified in a laborious process still subject to challenges, according to SEC filings. About 4,700 others were left in limbo because too little information came from Albertson's or the claimants. They will be resubmitted.

"It's become evident Albertson's really had no intention of settling this case from the start,'' said James Webster, the Seattle attorney handling the case.

Attorneys once estimated Albertson's was on the hook for about $100-million in unpaid wages The company, which never admitted wrongdoing, tallies claims so far at $14-million.

Webster hopes the new owners of pieces of Albertson's will be willing to bring the case to a end.

As for Rodman, who went on to work for Publix and Wal-Mart and now is a contractor who fills newspaper racks for the St. Petersburg Times, it's overdue.

"I worked just as hard for Albertson's as Larry Johnston,'' he said. ''But I've waited an awful lot longer for my money.''

Mark Albright can be reached at albright@sptimes.com or 727 893-8252. His On Retailing column appears every other Wednesday.

[Last modified June 21, 2006, 06:26:50]


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