Business & Tech
REI Furloughs 14,000 Employees, Halts CEO Pay
Furloughed employees will continue to receive health benefits during the 90-day period, according to the company.
SEATTLE (AP) — REI said Monday it would keep its 162 retail locations closed and furlough some of its roughly 14,000 employees without pay for 90 days as the COVID-19 pandemic continues to halt much of the retail industry.
CEO Eric Artz, who announced the decision in a blog post, said he and the Kent-based company’s board would go without compensation for six months, The Seattle Times reported. Senior executives will take a 20% pay cut and forgo any 2020 bonuses.
About 25% of corporate staff at the company’s Seattle-area headquarters will be laid off, and the remaining workers who make above $65,000 annually will have their wages temporarily cut up to 10%. Furloughed employees will continue to receive health benefits during the 90-day period, according to the company.
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“We believe this will be the most challenging period for our business, and we have to make some immediate decisions that impact REI employees,” Artz said.
On March 15, REI announced it was temporarily closing retail locations and putting employees on paid leave through April 15. But as the coronavirus crisis has continued, and as more governments have ordered the shutdown of nonessential businesses, REI decided to extend the closure.
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Artz stressed the temporary nature of the furloughs and said the company hopes to begin reopening some retail operations, starting with curbside pickup, in 45 days. “We look forward to welcoming you all back into our stores when it’s safe to do so,” he said.
Artz’s decision to cut his own pay marks REI as something of a retail outlier, Neil Saunders, a retail analyst with Global Insight, told the newspaper. Saunders noted that Abercrombie & Fitch, which also announced Monday that it was furloughing its North American retail staff, was cutting executive compensation by 10% to 33%.
Completely forgoing Artz’s pay is “something you’d kind of expect from REI,” added Saunders.
“To say, ‘We feel the pain and we’re going to have some of the pain as well,’ shows a degree of sensitivity.”