In the U.S., we now have over 100,000 COVID-19 cases, with New York making up about 40% of those cases. Businesses have been forced to close to contain the spread as many states have issued stay-at-home orders.
In states such as California and New York, only essential businesses such as pharmacies, hospitals, grocery stores, and delivery companies remain open. Restaurants and bars are some of the hardest-hit companies.
But one restaurant chain owner decided that he would give up his salary so his employees could keep getting paid.
Texas Roadhouse: Corporation with a conscience
In a securities filing last week, Texas Roadhouse CEO Kent Taylor said that he would give up his base salary and bonus for this year. It went into effect on March 18 and will continue through January 7.
Taylor said this would free up funds to keep paying front-line employees through the crisis and avoid massive layoffs.
In addition to this selfless act of kindness, the Texas Roadhouse board of directors made a surprise announcement. They voted Tuesday to suspend payments of quarterly cash dividends of the company’s stock.
This would apply to dividends paid out after March 27 “to better manage its cash position and enhance financial flexibility in light of the uncertainty in the global markets resulting from the COVID-19 outbreak.”
According to Louisville Business First, Taylor received compensation of $1.3 million in 2018, down significantly from his 2017 payout of $8.5 million. His salary was $525,000. His stock awards totaled $7.3 million in 2017 and zero in 2018. He also got a bonus of $829,316 in 2018, which was up from $710,230 in 2017.
Taylor opened the first Texas Roadhouse in Clarksville, Indiana, in 1993. The company has expanded today to 611 restaurants in 49 states and ten countries. All 514 restaurants are corporate locations.
As of March 19, Texas Roadhouse still operated its stores on a full, limited, or strictly to go basis and hadn’t closed any sites.
To boost cash reserves to pay employees, the company drew down $190 million from its revolving credit and now has over $300 million. Hopefully, the shutdown won’t last too much longer, but it’s reassuring to see CEOs giving up their entire salary and bonus to keep things running.
Other restaurant chains followed suit
Taylor isn’t the only one giving up his salary. The Darden CEO also gave up his salary to avoid mass layoffs. Darden owns restaurants such as Olive Garden, Longhorn Steakhouse, Cheddar’s, The Capital Grille, and Yard House.
Same-store sales fell 60% last week as patrons started limiting outings due to the COVID-19 crisis. While restaurants are still allowing to-go orders, many CEOs have no choice but to lay off employees or cut their salaries to make up for the massive decline in revenue.
On Wednesday last week, Darden implemented an emergency pay program that would cover hourly employees for two weeks in restaurants where they couldn’t work. This would be in addition to the permanent paid sick leave policy that Darden announced last week where workers get one hour of paid sick leave for every 30 hours on the job, beginning with the previous 26 weeks of work.
This would allow new employees to take advantage of the paid sick leave program as well.
Final Thoughts: Hats off to these CEOs and companies like Texas Roadhouse
Do you know of any other CEO’s or businesses offering to cut salaries so their employees could get paid? If so, please give them a shout-out in the comments!