WASHINGTON -- Rite Aid Corp. Chairman and chief executive Martin Grass, for the first time since taking the company's top job in 1995, got no bonus during the fiscal year that ended in February.
Rite Aid, the third-largest U.S. drugstore chain, failed to meet earnings targets under the company's bonus plan, the Camp Hill, Pa., company said in a proxy statement filed yesterday with the Securities and Exchange Commission. Grass had received a bonus of $898,000 a year earlier.
Grass' total compensation package was estimated at $12.9 million for the company's fiscal 1999, more than six times the amount he earned during the previous year.
However, all but $1 million of that total came from Rite Aid's estimate for the value of options to buy 1 million Rite Aid shares at $30.75 each.
The options package currently is worth nothing because shares have fallen more than 20 percent below the price at which Grass can profitably exercise the options.
Rite Aid shares plummeted 39 percent, to $22.5675, on March 12, when the company warned that its fourth-quarter earnings would not meet analysts' expectations.
The shares rose 50 cents yesterday, to $24.25.
Rite Aid stock climbed about 28 percent during the 1999 fiscal year, which ended Feb. 27. That's better than the Standard & Poor's stock index, which rose 18 percent over the same period, but a far cry from the 74 percent gain posted by rival Walgreen Co. during the same period and the 43 percent increase at CVS Corp.
Rite Aid has acquired several chains in recent years to keep pace with market leader Walgreen and No. 2 CVS. The costs of adding, closing and revamping stores and liquidating inventory cut into profit in the company's fourth quarter, when net income fell to $73 million, or 28 cents a share, from $119.7 million, or 44 cents, a year earlier.
For fiscal 1999, Grass got the same $1 million salary he'd received a year earlier. He received no options in fiscal 1988.
Grass has faced questions after reports that Rite Aid did business with closely held companies connected to him or his family. For example, Rite Aid purchased almost $10.1 million of products from LNK International, a manufacturer of private-label, over-the-counter medications, during fiscal 1999, the filing said.
Grass' father, company founder and director Alex Grass, owned 30 percent of LNK through a trust, and two daughters of Alex Grass had options to acquire 5 percent of that company, the filing said, but they have since sold those interests.
Pub Date: 6/05/99