Darden Restaurants CEO and execs have six-figure salaries restored – while thousands of workers face end of ‘emergency pay’ and risky reopening

Only a few months into a seemingly never-ending pandemic crisis, Darden Restaurants – the parent company of Olive Garden, Longhorn Steakhouse, and other suburban favorites – has quietly restored the base salary of CEO Gene Lee and executives. Meanwhile, thousands of its employees face the end of ‘emergency pay’ and serious questions about the safety of reopening.

Darden restored Lee’s base salary to $1 million effective June 1st. Other named executive officers had salaries of between $640,000 and $775,000 restored. The company’s non-executive directors also saw restoration of their pre-COVID compensation. For Lee, base salary made up less than 10% of his fiscal year 2019 compensation.

Back in March, Darden had announced that Lee would forego his salary and other executives were having their base salaries cut 50%, “until we are successfully on the other side of this.” Darden had already experienced steep declines in sales and announced soon after that 150,000 employees had been furloughed.

Darden announced in March that it would give workers three (initially two) weeks of ‘Emergency Pay’ of 50% of pay for hourly employees who could not work. However, that program rolled out in late March, so many Darden workers would have stopped receiving that pay long ago. Darden has not announced that it will continue this Emergency Pay program. (And it’s worth noting that companies can receive a 50% tax credit for wages and benefits paid to current employees due to the CARES Act.)

In a call with investors, Lee indicated that the company’s commitment to assist workers would be subject to change based on government relief:

David Tarantino, Analyst with RW Baird: Hi. Good morning. My question, Gene, is on the pay of the hourly workers. I know you did the right thing. It seems to implement this emergency pay. But I just wanted to confirm the length of time that covers. And then, once that expires, what your thought processes on and how you keep these employees engaged for when times do get better down the road?

Gene Lee, CEO of Darden Restaurants: Yes, David, I think the time commitment right now is once the disruption happened it’s two weeks. But that is subject to change depending on what happens with these relief packages from the government. We know that the government is going to start sending people checks directly and not come through us. That has to be part of our calculation. And when we think about our people, we are going to try to keep people employed maybe through our furlough program where we can still have — they can still have access to their benefits, and they don’t lose their tenure. We are really, really trying to work through keeping our people engaged, so when it’s time to ramp back up that we can ramp back up quickly. But we’ve to continue to work in concert with the government. And if they’re going to compensate the American public directly, then that has to be a part of our calculation as we think about our people.

Will Darden also make part of their “calculation” that enhanced unemployment benefits, for those lucky enough to actually get them, will run out in July? The company indicated that as May 19 the company was cushioned by access to over a billion dollars of available liquidity:

Based on week ending May 17 results, the Company’s ongoing weekly cash burn rate has improved to less than $10 million including capital expenditures. Given the increased confidence in our cash flow projections and stabilization in the credit markets, the Company fully repaid its $750 million credit facility on May 5, 2020. With approximately $700 million of cash on hand as of May 17, the Company is well positioned for the near term while retaining financial flexibility to fully access its $750 million credit facility should capital requirements present. Including cash available through the credit facility and cash on hand, we have access to over $1.4 billion of liquidity.

Meanwhile, Darden workers face another risk: restaurants reopening before the pandemic has been contained.

Darden announced in mid-May that it planned to reopen 65% of its dining rooms by the end of the month. At the beginning of May, Darden opened most of its restaurants in Georgia for dine-in service – despite data showing that the state received tens of thousands of visitors from other states that had not lifted all restrictions. The New York Times quoted Dr. Robert W. Amler, dean of the School of Health Sciences and Practice at New York Medical College, saying that “There really is no scientific study” on the best ways for restaurants to reopen following a Covid-19 outbreak.

Darden’s actions raise serious questions. Will its employees continue to receive emergency pay as the pandemic rages? Will workers be forced to choose between unemployment benefits (which for millions has yet to or may never arrive) and going back to work during a pandemic?

Are you a worker at a Darden Restaurants brand (e.g. Olive Garden, Longhorn Steakhouse, Cheddar’s Scratch Kitchen)? Tell us how you’ve been treated by the company during the pandemic – if you’ve gotten ‘emergency pay’, send us a copy of your paycheck! You can contact us at jsussman AT unitehere DOT org.