Aramark’s general counsel, the Philadelphia company’s top legal official, is retiring, chairman and chief executive Eric Foss told employees in an email Tuesday shortly after the company’s quarterly earnings call, which raised questions about the handling of last year’s bonuses for lower-level managers.
Steve Reynolds, who joined Aramark in 2012, the same year Foss took over as president and CEO, is the second top executive to depart the company in the last month.
On Jan. 9, Brian P. Pressler, Aramark’s chief accounting officer and controller, resigned effective Friday to take a similar job at another company, Aramark said in a Jan. 15 Securities and Exchange Commission filing.
Aramark did not comment Thursday on the departure of Reynolds, whose age was listed as 60 in the company’s most recent annual report.
Later Tuesday, Aramark’s quarterly report to the SEC said Reynolds gave notice on Jan. 31. Foss’s email thanked Reynolds for counseling Aramark through its latest initial public offering in 2013 and two big acquisitions. The food-and-facilities giant paid $1.4 billion in 2017 for Avendra LLC, which manages purchasing for 650 hospitality companies, and $995 million last year for AmeriPride Services Inc., a uniform and linen rental and supply company based in Minneapolis.
Reynolds will work with his successor, Lauren A. Harrington, through April 1, the SEC filing said. Harrington is currently vice president and associate general counsel at Aramark.
The bonus controversy at Aramark, which is among the largest U.S. providers of food, facilities, and uniform services, started Dec. 3 when the company notified thousands of managers that fiscal 2018 bonuses, “historically paid in December, will be paid in February.”
That set off alarm bells that the bonuses, which often amount to 15 percent to 25 percent of total compensation, depending on performance, would not be paid. Sure enough, late on Feb. 1, Aramark notified lower-level managers that they would not get their 2018 bonuses because of “great disparity in the financial performance across our US businesses.”
Instead, the company said, it would make onetime payments ranging from $5,500 to $27,500 for all managers at a particular level using money it saved on taxes because of the 2017 Tax Cut and Jobs Act, which slashed corporate tax rates from 35 percent to 21 percent. Aramark booked a tax benefit of $237.8 million in 2018 because of the tax reform.
This outraged some managers because they believe they are getting less than they earned according to their bonus plans while others who missed their targets are getting more than they would have otherwise.
During Aramark’s earnings conference call Tuesday, chief financial officer told Wall Street analysts that "the company paid bonuses in 2018 that were earned,” despite the notice just days earlier making the blanket statement that bonuses would not be paid for whole tiers of managers.
Foss, who touted Aramark’s record financial performance in 2018, received a $2.6 million annual incentive payment, even though he missed one of his targets. His total pay was $16 million, including $250,000 for personal use of the company aircraft.