What is Jim Sinegal’s Net Worth and Salary?
Jim Sinegal is an American business executive who has a net worth of $1 billion. Jim Sinegal has earned his fortune as the co-founder and former CEO of Costco, the largest membership retail chain in the United States. Sinegal co-founded Costco with Seattle retailer Jeff Brotman in 1983. He retired as CEO in 2012 and retired from the Board of Directors in 2018. He was succeeded by Craig Jelinek. There are nearly 800 Costco locations worldwide and annual revenue exceeds $200 billion.
Salary
Jim Sinegal famously accepted a relatively modest annual salary compared to his Fortune 500 peers. Jim’s base salary was $350,000. Many executives of similarly-sized companies spent more per year on personal security. In 2010, Sinegal earned $3.5 million with his stock options factored in. The median salary and compensation for other Fortune 100 CEOs that year was $9.3 million.
Jim’s total compensation increased substantially when bonuses and stock options were awarded each year. For example, in an average year Jim might have earned a $200,000 bonus and $4 million worth of options.
Early Life
James Sinegal was born on January 1, 1936, into a working-class Catholic family in Pittsburgh. His family moved to San Diego while he was in high school and he graduated from Helix High School. He got his AA degree at San Diego City College and his BA from San Diego State University in 1959. While he was in college, he got a job as a grocery bagger at FedMart. He discovered that he loved the retail business. He worked his way up at FedMart to executive vice president of merchandising and operations. From 1977 to 1978 he was vice president of merchandising for Builders Emporium. He was an executive vice president with the Price Company from 1978 to 1979. He was the protégé of Sol Price, the father of the warehouse club store concept.
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Costco
In 1983, Sinegal co-founded Costco with Seattle retailer Jeff Brotman. A decade later, Costco merged with the pioneer of the warehouse discount concept, the Price Company. Costco is now one of the largest retailers in the world. There are approximately 800 Costco stores in the world.
In 1993, the growing competition was threatening both Costco and Price Club. The two companies partially merged when Price’s earnings dropped to 40%. The new company was renamed PriceCostco. It focused on international expansion and opened stores in Mexico, England, and South Korea. However, sales continued to drop. Sinegal and Robert Price had different ideas on how to run the company. The two companies went their separate ways in 1994. Sinegal changed the name of his company to Costco Wholesale in 1997.
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During his time as CEO, Jim famously traveled to each Costco location every year to inspect them personally. Costco was the first warehouse club to include fresh food, eye-clinics, pharmacies, and gas stations – all of which were Sinegal’s ideas. Sinegal is known for a management style rooted in the belief that employees who are treated well will in turn treat customers well. Costco provides compensation and benefits for his employees that are significantly higher than the retail norm. Over 90% of Costco employees qualify for employer-sponsored health insurance. Costco has the lowest employee turnover rate in retail. One story that is often recounted about Sinegal is how, when he found out Costco was paying 88% of employee health care expenses when the company had committed to paying 90%, he reimbursed the employees for the extra 2% in the form of stock directly into their 401Ks so it wouldn’t be taxed.
Sinegal is considered one of the most prominent retail figures in American modern history. Sinegal served as President and CEO of Costco until 2012. On January 2012 (his 76th birthday), Sinegal announced he was stepping down from the empire he built over the previous three decades.
He was succeeded by Costco’s president and chief operating officer, Craig Jelinek. Jelinek joined Costco in 1984 as a warehouse manager.
Hot Dog Quote
Costco has famously kept the price of hot dogs from its restaurants locked at $1.50 even as inflation raised the prices of many other products. According to legend, one day Craig Jelinek approached Sinegal and complained that the company was losing money on every hot dog it sold. Here’s how the conversation allegedly went, according to an interview with Jelinek:
Jelinek: “I came to (Sinegal) once and I said, ‘Jim, we can’t sell this hot dog for a buck fifty. We are losing our rear ends.“
Sinegal: “If you raise the price of the effing hot dog, I will kill you. Figure it out.“
Jim was asked about hot dog prices again in a July 2022 CNBC interview. In the interview, Jim Cramer asked him if American’s might see an increase in hot dog prices considering all other commodities had sky rocketed in price due to inflation. Sinegal repled:
“No.”
Personal Life
Sinegal and his wife Janet met in college at SDSU. They have three grown children. They live in a waterfront mansion on Lake Washington where their neighbors include Steve Ballmer and John Nordstrom.