First delay, then don’t pay.
That appears to be the tactic Aramark chief executive Eric Foss — who has been touting the Philadelphia company’s record revenues while barely reaching a target set three years ago for Aramark’s 2018 profit margin — used when it came to last year’s bonuses for thousands of low-level managers, whose duties include overseeing cafeterias and running uniform operations.
“While fiscal year 2018 was a good year for the total company, it was a year in which we saw great disparity in the financial performance across our U.S. businesses, which impacted bonus payments,” the food and facilities services company told employees in an email last Friday. “This resulted in a decision not to pay Fiscal Year performance bonuses for bands 5-8 in the US.” Aramark divides managers into eight tiers or “bands,” with band one being the highest level.
Aramark’s annual bonuses are typically paid in early December, but the company told employees last week that the bonuses were to be paid but that they would be delayed until February.
The company declined to say Sunday how many managers were not going to receive their expected bonuses or how much money Aramark would save by replacing the bonuses with onetime awards. Bonuses for the higher-ranking managers in bands two through four were not mentioned in Friday’s notice.
Aramark had an adjusted operating income of $1.1 billion during the financial year, up 15 percent from the previous year. The company employs 274,400 people globally, according to its latest annual report — about 14,000 in Pennsylvania, including nearly 6,500 in the Philadelphia region.
Instead of paying bonuses, Aramark said it would use some of the money it saved as a result of the corporate tax cuts in 2017 to pay “select U.S. leaders" a “onetime special recognition award.” Those payments, to be made Feb. 15, will range from $27,500 to $5,500, according to multiple sources within the company.
Aramark said it booked a $237.8 million benefit from the federal Tax Cuts and Jobs Act of 2017, which slashed the federal tax rate for corporations to 21 percent from 35 percent, the company disclosed in its annual report.
CEO Foss received $2.6 million in annual incentive bonus payments for the 2018 financial year. That was 77.3 percent of the target the board of directors had set for him. Foss’ total compensation for the year was $16 million.