Are Laid Off Employees At Beyond Meat The Scapegoat For Bad Management?
With a CEO-to-worker pay ratio of 91:1, is firing 200 staff the best solution?
Last month, Beyond Meat announced a second round of layoffs, this time letting go about 200 employees or 19 percent of its workforce. (Just two months earlier, the company laid off four percent of its employees.) Both rounds were explained as cost-savings measure for a company steeped in revenue challenges.
In times of economic downturn, and in Beyond Meat’s case, reduced sales and stock price plunges, layoffs often seem like the go-to tactic of corporate America.
But did Beyond make the best business decision, or just the laziest? Also, for a company whose mission is to save the planet, Beyond Meat should be held to a higher standard for how it operates, especially how it treats its own staff.
A closer look reveals that the company’s financial woes stem not from employing too many people, but from poor management, starting at the top. By many accounts the problems at Beyond Meat are clear: poor execution of new product roll-outs, botched fast food opportunities, and questionable executive hires.
Botched Opportunities
For example, Beyond announced a three-year deal with McDonald’s in early 2021, but then the company’s stock fell in the wake of a failed U.S. test of the McPlant burger with the Beyond patty just one year later.
Poor execution with product introductions also resulted in challenges with key partnerships at other fast food giants such as Pizza Hut and KFC.
According to one in-depth account of exactly what is going on at Beyond Meat HQ: “Beyond has a history of showing products to customers without a capital-efficient approach or the technical know-how to commercialize them”.
These problems will not be solved by firing 200 mostly rank and file employees.
Bad Executive Hires
Mismanagement is also apparent from the various shake-ups in C-suite positions, raising serious questions about Beyond Meat’s leadership’s decision-making (and corporate culture) when it comes to hiring the right people.
The nose-biting COO Doug Ramsey is the most blatant example. As a refresher, Ramsey was arrested in September for allegedly biting a man’s nose following a college football game in Arkansas. Ramsey left Beyond Meat in October after the company suspended him.
Several other executives had less dramatic exits, but similarly short stints.
For example, Bernie Adcock, Beyond Meat’s chief supply chain officer, left in September, and the company then eliminated his position. Adcock had only been with Beyond Meat since December 2021. The company had announced the hiring of Adcock and Ramsey together last December, since they both hailed from meat giant Tyson Foods where they had each worked for 30 years.
The dynamic meat duo were celebrated as “protein industry veterans” who were poised to be “instrumental in growing Beyond Meat’s operations, supply chain, and manufacturing”. CEO Ethan Brown said about the hires at the time: “After a long and careful search, I could not be more thrilled to announce the arrival of Doug Ramsey and Bernie Adcock at Beyond Meat.”
Both were gone in less than a year.
Also, Phil Harden, who was CFO since July 2021, left the company in October, after a little over a year.
And Global Chief Growth Officer Deanna Jurgens was laid off in October, and her role was eliminated. She served in that role for a little over a year as well.
All of this turmoil is causing a lot of reshuffling of responsibilities along with potential confusion about just who is in charge of what.
Bloated Compensation
Given the top-level staffing changes, it’s especially eye-opening to look at how these same executives were compensated upon hiring, even as their tenure was short. According to the company’s proxy statement for its May 2022 shareholder’s meeting, base salaries and bonuses for these four former executives were as follows.
Doug Ramsey (gone in less than a year)
Base salary of $475,000
Eligible for 100% of base salary as bonus
Sign-on bonus of $450,000 (subject to clawback, meaning returning the money)
Additional sign-on bonus of $275,000 if he had made it to one year
Retirement benefits of $1M and stock valued at $1.75M, if he had stayed on.
Bernie Adcock (came and went around the same time as Ramsey)
Base salary of $400,000
Eligible for 75% of base salary as bonus
Sign-on bonus of $350,000
Relocation bonus of $100,000
Settling in bonus of $200,000 (move from Arkansas).
Phil Harden (gone in just over a year)
Base salary of $440,000
Eligible for 60% of base salary as bonus
Sign-on bonus of $400,000
A “settling in” bonus of $125,000
Relocation expenses up to $150,000.
Harden’s move was from Washington State to Southern California; up to $275,000 just to relocate within the same time zone seems over-generous.
Deana Jurgens (gone in a year and a few months)
Base salary of $435,000
Eligible for 100% of base salary as bonus
Sign-on bonus of $350,000.
According to the same proxy statement, the company justifies the high bonuses by basing them on “the competitive landscape for top talent and the critical importance of hiring experienced executives with relevant industry experience”.
They are also “subject to repayment on a prorated basis” under certain conditions. Therefore, it’s very possible that at least some of the bonus money was returned or never paid. One would hope that Ramsey especially was subject to a clawback clause in his contract given his alleged behavior.
(I emailed the company to ask if any of the bonuses for these four short-term executives were paid back, as well as for a comment for this story, but did not receive any reply after multiple attempts.)
What about compensation for CEO Ethan Brown?
Brown’s base salary is $500,000, and in 2021 Brown made another $180,000 in bonus. Also, Brown’s bonus structure was to be eligible for 50% of base salary in 2019. In February 2020, the company increased this eligibility to 100%.
Public companies are also required to report the ratio of the CEO’s compensation to the median employee, as a measure of how equitably the company is paying its staff.
Let’s just say at Beyond Meat, not very.
That ratio was a whopping 91:1 in 2021. Here is how that breaks down:
CEO salary is $500,000 compared to the median salary of $63,120
CEO annual incentives are $180,000, compared to $3,236 for the median employee
CEO equity awards are close to $5.9 million, compared to $4,000 for the median employee.
The totals are close to $6.6 million for CEO Ethan Brown, compared to just over $72,000 for the median employee, which is how you get to the 91: 1 ratio.
While this is not atypical in corporate America, you would think that a company like Beyond Meat, claiming to save the world, might treat their employees more equitably.
In fact, some other mission-based companies do treat their employees more equitably. For example, Dr Bronner’s, the iconic organic products company, maintains a policy that the top executives do not make (in total) more than a ratio of 5:1 compared with staff.
I confirmed this with Ryan Fletcher, the company’s director of public relations, who explained further that executives also receive the same exact benefits as staff, such as bonuses and healthcare. He added that “in lean times, executives have also given up some of their benefits while ensuring that staff still receive them.”
That is what leadership looks like.
Beyond Meat should stop throwing its lower level employees under the bus.
It’s time for Beyond Meat to look inward, and upward. Starting at the top.
Originally published at Forbes.com.