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A ‘quiet’ place?

With Halloween fast approaching, I thought I’d regale you with a spooky tale of the corporate world’s favorite new boogeyman: quiet quitting.

Like many scary things for over age 45, this story begins on TikTok and Reddit, where this summer Gen Z and millennial workers were riffing about “quiet quitting” — generally defined as doing the minimum amount of work required of them and not going above and beyond.

This in turn kicked off a panicked wave of stories and podcasts from the likes of The Wall Street Journal, Bloomberg, Forbes and Fortune, decrying anti-hustle culture as the End of Western Civilization as We Know It, with spine-tingling, bone-chilling headlines like, “Why Half The Workforce Is Quiet Quitting, And What To Do About It.”

Since then, like a monster in the third act of a creature feature, the clickbait stories about quiet quitting will not die — even though the phenomenon may turn out to be about as real as Dracula or the Wolf Man.

The most hyperbolic stories are those that would lead one to conclude that half the U.S. workforce are total slackers.

The one stat trumpeted most in quiet-quitting stories is a June Gallup poll of U.S. employee engagement. Gallup warned of a “quiet quitting crisis,” noting that quiet quitters “make up 50% of the U.S. workforce” — and “probably more,” Gallup added for pulse-quickening good measure.

Here’s the thing, though: The June survey of nearly 15,100 full- and part-time workers found that 32% are engaged at their jobs and 18% are “actively disengaged” (read “one foot out the door”). Gallup labeled the remaining middle 50% as “quiet quitters,” saying these are “people who do the minimum required and are psychologically detached from their job.”

But Gallup’s been conducting this same poll for at least 22 years and while it measured four-point increases in people who say they’re actively engaged or disengaged in their jobs since 2020, the folks they’re calling “quiet quitters” have hovered between 50% to 55% of the workforce for decades, so there’s not anything necessarily new going on here.

In other words, these are people, who like many millennials and Gen Zers, don’t define themselves by the work they do. They show up, do what they’re asked, get paid and go home. No more, no less.

The term “quiet quitting” apparently was coined by 44-year-old Gen X career coach Bryan Creely, who posted a TikTok video with his thoughts on a March article from Insider devoted to “coasting culture.” Insider writer Aki Ito wrote about how exhausted, overtaxed workers had “quietly decided to take it easy at work rather than quit their jobs.”

Several of the mainstream stories about quiet quitting focus on remote work or white-collar jobs, but many viral videos and posts about quiet quitting were created by lower-paid hourly workers who say they’re being asked to take on more and more work for no extra compensation. “Act your wage” is a common saying among these folks, and it’s notable that this comes at a time when -to-worker ratios are at an all-time high, with the average S&P CEO in 2021 making 324 times more than their workers’ median pay. Amazon.com Inc. tops the list, with a CEO-to-worker pay ratio of 6,474 to 1. (For more on this, see our October 2022 cover story about executive compensation.)

Amid -sparked labor shortages, everyone from hourly workers to office desk jockeys to remote executives was asked to take on more duties, with work increasingly encroaching on personal and family time in ways both subtle and substantive.

It’s perhaps no surprise then that what many overextended “quiet quitters” are actually talking about in their posts and videos is the need for work-life balance — that they’re literally tired of living to work, rather than the other way ’round.

There’s a reason the phrases most likely to repel job seekers these days include “must handle stress well,” “willing to wear many hats” and “responsibilities may include those outside the job description,” according to the results of a survey of 800 U.S. adults released in September by Paychex Inc., a payroll processing company.

For many, “quiet quitting” seems to be just another way of saying they’re setting work-life boundaries.

But it does make for scary headlines.  

A slow shift

Jeremy Caleb Johnson is advising clients preapproved for a mortgage at the beginning of 2022 to adjust expectations.

The price of houses they may have looked at just months ago likely not only went up significantly, but the low available then have also risen dramatically.

“What you may have been able to afford in January of this year, you can’t afford that now,” says Johnson, an agent and associate broker with Long & Foster/Christie’s International Real Estate in Virginia Beach. “We all have places that we would prefer, neighborhoods and parts of the city that we would prefer to live in, but we may not be able to do that now.”

Tight inventory across caused the median sales price (MSP) for a home to rise from $300,000 last year to $322,500 in July, according to a market summary from Real Estate Information Network Inc. (REIN), the multiple listing service that covers the region from Williamsburg east through Virginia Beach and south across the North Carolina border. 

“A house in Virginia Beach is going to be a little more expensive than a house in ,” says Johnson, chairman-elect of the Hampton Roads Realtors Association. “A house in Portsmouth is going to be less expensive than a house in Chesapeake. Buyers may have to find a little bit of flexibility in their budget to say, ‘OK, I really want to be in Chesapeake, but maybe Portsmouth is OK because I can afford to be in this city, or this part of the city as opposed to that part of the city.’”

There are signs that the market is starting to soften due to higher prices and mortgage rates. There were 2,777 pending sales in July, down 19.3% year-over-year and 9.66% month-over-month. Settled sales during that month totaled 2,909, a 23.4% decline year-over-year and down 12.38% month-over-month. Median days on the market were 12 in July, up from nine in June, according to REIN.

“Unlike the 2021 buyer frenzy that we had, we have a more cautious buyer who is very concerned that they may be overpaying for a property,” says J. Van Rose, president of Rose & Womble Realty Co. in Virginia Beach. “They’re still out there. They’re still looking. But instead of getting 15 to 20 offers, we might get two to three, and they’re not well over the list price.”     

Rose says he’s also starting to see contracts that include home inspections, closing-costs assistance and other contingencies that might have been waived when the market was hotter.

While buyers are gaining some bargaining power, they have fewer properties to choose from. There were 4,129 active listings in July, down 10.65% year-over-year and up only slightly — 0.36% — month-over-month, according to REIN.

Rose says one group that is struggling to find property they can afford are active-duty military members, who make up a significant portion of Hampton Roads’ population. They may have been able to combine their housing allowance with a Veterans Affairs (VA) loan to buy the house they wanted when interest rates were low but can’t afford it now that rates are much higher.

Hampton Roads’ housing market is less affordable than it used to be, says Virginia Realtors Chief Economist Ryan Price. Just three years ago, the region’s MSP was $258,950, which buyers with a gross household income of about $61,000 could afford, assuming a typical housing cost burden of 30% of their income.

Today, a buyer would need a gross income of $84,900 to afford a house at the current median price, but regional median income was $68,454, according to the 2020 census. Although the regional median income has likely gone up some since then, it is definitely still below $84,900, Price says.

Rising mortgage rates haven’t made the situation easier. Tidewater Mortgage Bankers Association President Mike Grunwald says buyers panicked earlier this year as mortgage rates began climbing faster than he’d ever seen in his 13-year career. Pre-approvals had to be reevaluated and some clients became discouraged.

Rates, which had climbed as high as 6%, were varying “between 5% and 6%” as of August, “depending on the type of loan program and a buyer’s income and credit rating,” he says. The Federal Reserve , responding to inflation, raised benchmark interest rates four times as of early September, with another hike expected later in the month.

“There aren’t a lot of [refinances] going on, unless it’s for a divorce or they’re cashing out,” says Grunwald, a senior loan
officer at Southern Trust Mortgage in Virginia Beach.

Speaking in August, Grunwald said he thought mortgage rates had probably peaked for the foreseeable future, adding that there were indications that the federal government could provide incentives for builders to construct more affordable housing or offer tax credits to sellers. There’s also been talk of a new 40-year mortgage to help lower payments.

“There’s got to be some kind of responsible action to what’s going on,” Grunwald says. “The middle class has to have some place to live.”

Read here about Hampton Roads’ rental market.

Valley views attract scenic train tours

The views Steve Powell and his employees at Buckingham Branch see daily while riding the rails inspired him to launch the Virginia Scenic Railway.

“There are a lot of that love railroads, and we love sharing our railroad. It’s a unique way of seeing the Virginia scenery instead of riding on the interstate,” says Powell, the railroad’s president.

Virginia Scenic Railway is the commonwealth’s only regularly scheduled sightseeing tourist train. The railway began service on Aug. 4. “Our trips sold out in 10 days,” Powell says. “We are sold out through Thanksgiving.”

The new railway offers twice-daily three-hour excursions from Staunton through the . Buckingham Branch has a permanent operating easement from the state government to use the tracks.

The Blue Ridge Flyer leaves from Staunton’s Amtrak station and travels to Afton Mountain and through the Blue Ridge Tunnel before turning around in Ivy.

The Alleghany Special starts in Staunton and goes through the Shenandoah Valley toward the George Washington and Jefferson National Forests before turning around in Goshen for the trip back. Both routes offer prime autumn leaf peeping.

Excursions occur every Thursday, Friday, Saturday and Sunday. Each includes meals, which are made onboard.

“I like to call it a bistro on rails,” Powell says. “People can come get a good sandwich or salad and feel like they are in a .”

The new excursions are a big plus for Staunton’s industry, says Sheryl Wagner, Staunton’s director of tourism. Her department gets four or five calls a day from interested riders.

“It is a tourism director’s dream to have an attraction in your destination that is unique but also appealing to a large audience,” she says, adding that the rail excursions will have a positive impact on Staunton’s tourism . “Since the train station is conveniently located in downtown Staunton, train guests can easily walk to shopping, or lodging.”

The railway also plans to offer Santa Claus trips through the holiday season. “We want to have kids and families on there to meet Santa all through December,” Powell says. “These will be shorter rides with no meals.”

Next year’s rides will start up in late winter or early spring.

“We are really excited about getting more cars so people can ride [with] different seating options,” Powell says, such as a coach car without tables. 

Radford Army plant contract extended through 2026

While the contract extension for operation of the sprawling is reassuring from an economic development perspective, it also has sentimental value to the community.

“The Army Ammunition Plant means a lot to our Systems workforce, but also to the generations of families in our community that have kept the site running since World War II,” says Brian Gathright, vice president and general manager of Ordnance Systems Inc., the that operates the plant. It’s a division of Falls Church-based BAE Systems.

BAE’s contract to manufacture military propellants and explosives for the U.S. Department of Defense now extends through 2026 with a ceiling of $1.3 billion.

The U.S. Army announced the extension in July, ensuring continuity at one of the largest employers in the . BAE began operating the arsenal in 2012 and oversees about 3,000 employees and subcontractors. The main industrial site sits along the New River in Montgomery and Pulaski counties between the cities of Radford and Blacksburg. A second storage site is about
12 miles away, near Dublin.

“BAE Systems’ dedication, focus and pride remain just the same as the first day we stepped on site to operate the Radford Army Ammunition Plant over 10 years ago,” Gathright says.

That dedication means a lot to the New River Valley.

“The Radford Army Ammunition Plant … is a significant employer in Montgomery County and the New River Valley,” says Brian Hamilton, Montgomery County’s director of economic development. “Radford Army Ammunition Plant employees receive higher than average manufacturing wages, which has a substantial economic impact on the region.”

In a report by the Virginia Employment Commission, BAE ranked seventh among largest employers in the New River Valley behind powerhouses such as , Volvo Group North America Inc., Radford University and Carilion New River Valley Medical Center.

“Historically, the ammunition plant has been instrumental in developing and establishing neighborhoods and infrastructures here in Radford dating back to the 1950s,” says Kimberly D. Repass, the city’s director of economic development.

Opened in 1941, the Radford plant is one of a handful of government-owned ammunition suppliers still operating. Work on a new nitrocellulose manufacturing facility at the plant began last year, an effort the Army said will transform the Radford site “from a World War II-era plant to a 21st-century installation.” 

Out and About

1. Martinsville Speedway President Clay Campbell celebrates the raceway’s 75th anniversary on Sept. 7.  2. L to R: U.S. Sen. Tim Kaine, U.S. Secretary of Energy Jennifer Granholm and Virginia Transformer Corp. Prabhat K. Jain cut ribbon on Aug. 25 at VTC’s Troutville facility for two new production lines that will support electric vehicle charging. 
3. L to R: Howard Mittman, president of 888 Holdings, which has partnered with Authentic Brands Group to run SI Sportsbook; Ida McPherson, co-owner of Virtual
Entertainment Partners; and Hampton University President Darrell K. Williams hold a check showing SI Sportsbook’s $25,000 tech education donation to the university. 
4. Students participate in James Madison University Recreation’s inaugural Color Run/Walk on Sept. 4.  5. Cliff Fleet (L), president, CEO and chair of the Colonial Williamsburg Foundation, and Gov. Glenn Youngkin speak during the Greater Williamsburg Chamber of Commerce’s inaugural Business Leaders Community Breakfast on Aug. 16.

Agriculture conference headed for Danville

A new for the (CEA) industry will debut Oct. 25 at the Institute for Advanced Learning and Research (IALR) in .

One goal behind the event, dubbed CEA Summit East, is “highlighting some of the CEA growth that’s happening in Virginia — and particularly in Southern Virginia,” according to organizer Kaylee South.

Sure to be a topic of discussion at the conference: New Jersey-based AeroFarms, which this year opened a 138,670-square-foot, $53 million vertical farm in Pittsylvania County. Located in Cane Creek Centre, a joint industrial park owned by the city of Danville and Pittsylvania County, the AeroFarms facility is expected to create more than 150 jobs and has been promoted as the world’s largest indoor vertical farm of its kind. Roger Buelow, chief technology officer for AeroFarms, is the keynote speaker for CEA Summit East.

The conference will be jointly run by the Controlled Environment Innovation Center — a joint -IALR center located on the IALR campus — and Indoor Ag-Con, a national CEA trade show and conference.

Additionally, organizers are hopeful the conference will spur more local economic development by encouraging networking between CEA farmers and researchers in the Eastern U.S. as well as economic development officials and real estate developers. 

“At the highest levels in the state, they’re interested in CEA,” says Scott Lowman, vice president of applied research at IALR.  “So, we feel like we’re doing our part to help bring everybody together.”

South, one of the conference’s organizers, is an assistant professor in Virginia Tech’s School of Plant and Environmental Sciences but is based at the Controlled Environment Agriculture Innovation Center in Danville. She expects the conference to attract about 250 attendees.

“I’m really excited to just meet in the industry and have the chance to bring together industry and academia people,” she says.

Controlled environment agriculture refers to “growing agricultural products within enclosed environments where you’re regulating the environment for the specific agricultural products that you’re producing,” explains South.

It can be as simple as using hoop houses (hoops positioned over crops and covered by plastic) or as sophisticated as vertical farms, where plants are grown indoors, stacked vertically on shelves, improving food safety and requiring less water and pesticide.

Founded in 2002 as an economic development engine for Southern Virginia, the IALR houses research initiatives and provides workforce training and conference facilities.  

Keeping watch

The question of the quarter: Are we entering a recession? One key indicator of a future recession can be inflation, which hit a 40-year high this year.

Between June 2021 and June 2022, the consumer price index increased by 9.1%, according to the U.S. Bureau of Labor Statistics. One of the first tangible signs for many consumers were at the pump, which exceeded $5 a gallon earlier this year, although prices dipped to a statewide average of $3.45 per gallon in Virginia by mid-September.

The Federal Reserve Bank has also taken actions to cool inflation this year, enacting two 0.75-point interest rate hikes in a row, after two years of 0% interest rates during the pandemic.

The Fed did this to break the “grip of inflation,” as Atlantic Union Bank John Asbury puts it, designed to create “demand destruction” for products with soaring prices.

In late September (after this issue went to press), the Fed’s voting body was set to meet, with some traders predicting that it could raise interest rates again by as much as a percentage point.

Although the word “recession” strikes fear in the hearts of Americans who suffered losses during the 2008 Great Recession, the technical definition is two consecutive quarters of decline in GDP, which occurred during the start of the COVID-19 pandemic, as well as other periods throughout the past 25 years.

In a Henrico County town hall meeting in June, Richmond Fed President and CEO Tom Barkin said, “Historically, eight of the last 11 Fed tightening cycles have been followed by some sort of a recession.” He predicted that and issues would subside in coming months. “That means inflation should come down over time,” Barkin said, “but it will take time.”

Nonetheless, Virginia businesses and bankers are keeping a watchful eye on their budgets as they plan for the end of the year and 2023.

“We’re in a little bit of new-ground territory,” says Brian Schools, president and CEO of Chartway Federal , noting the combination of inflation and labor shortages in today’s market. “But I will tell you the loan volume has been really good of recent.”

This counteracts worries that rising interest rates would cause a slowdown in loans, both on the consumer and commercial side. What bankers have seen so far in the marketplace is bucking that logic.

“It’s an intuitively natural assumption that as interest rates rise, loan demand will go down,” says Virginia Bankers Association President and CEO Bruce Whitehurst. However, he notes, “loan demand is pretty good on the commercial side. Everyone’s looking for the potential of a slowdown but [we’re] really not seeing it at the moment.”

Thomas Ransom, Truist’s Virginia regional president, says his commercial and mid-market customers are “generally positive” about the economic outlook but still watchful. Photo by Shandell Taylor

Strong commercial demand

Coming out of COVID, banks expected business would be a little soft, says Cecilia Hodges, M&T Bank’s regional president for Greater Washington and Virginia. But her bank has seen just the opposite.

“We’re having a really strong year in all areas of our business right now,” she says. “Demand for commercial loans is very strong. Business activity has been very strong.”

In fact, one trend that has emerged in commercial loans has been that more businesses are borrowing now to expand their inventories because they believe prices may continue to rise with inflation — or they’re trying to avoid even higher interest rates in the months to come. More companies are also “doubling down” by making capital investments, considering acquisitions and growing their businesses, Hodges adds.

Truist’s commercial and middle-market clients remain “generally positive” about current economic conditions, says Thomas Ransom, the bank’s Virginia regional president, but there are also growing concerns about labor shortages and margin pressure amid rising interest rates and higher input costs.

“Given all of this, we remain generally positive about our prospects for continued loan growth,” Ransom says. “At the same time, we acknowledge that there’s increased uncertainty associated with the softening economic environment, which may cause loan growth to soften, but currently we’re continuing to help our clients understand the marketplace and their options.”

In the University of Michigan’s U.S. consumer sentiment survey for August, 55.1% of polled felt positively about the , marking a three-month high after June’s low of 50%, and consumers predicted prices to increase at an annual rate of 3% over the next five to 10 years.

Asked whether now is the right time for businesses to take out loans, Hodges says it depends on how a particular company is faring in the current economic environment. Some businesses thrived during the pandemic, adopting new technologies and figuring out ways to increase productivity and demands for their products and services. Other businesses, though, have felt more pressure to increase wages and pricing, she says.

“For some of those companies, it’s been a struggle for them, and it’s been hard for them to spend money and make investments,” Hodges says.

Ransom says Truist has seen its corporate finance and mergers and acquisitions (M&A) business pick up this year.

“We are actively having conversations with our clients to understand how inflation and rising rates impact their businesses so that we can work with them on ways to strengthen their companies’ positioning for any down cycle,” he says.

Atlantic Union has also seen some commercial clients rely more on cash reserves when investing in new inventory.

“We’re starting to see some borrowers use more cash instead [of taking out loans],” says David Ring, an executive vice president and commercial banking group executive with Atlantic Union Bank. “For equipment purchases in particular, [clients are] starting to use cash rather than financing or even vendor financing because it’s a more productive use of their cash.”

On the consumer side

When looking at consumer loan demands, two areas have become sticky for low- to middle-income consumers in particular: mortgages and car loans. The two-point increase in interest rates since the start of the year has caused a slowdown in and mortgage applications, says Ryan Price, chief economist with Virginia Realtors.

In June, home sales dropped by nearly 19% statewide compared with June 2021, Virginia Realtors reported, affecting the whole state, with the largest declines in the Shenandoah Valley, the Northern Neck, the Eastern Shore and suburban Richmond and Northern Virginia.

Higher interest rates are “complicating a lot of potential buyers’ — and even sellers’ — budgets,” Price says. “It’s adding a lot of cost to the mortgages, and it’s also reducing their purchasing power.”

Credit unions in particular may start to feel the effects of a decline in home loan applications. Mortgage lending typically accounts for about 50% of all credit union loans, including first mortgages, refinances and home equity lines, says JT Blau, chief advocacy officer of the Virginia Credit Union League, which represents 108 member-owned credit unions.

“We’re hearing from a lot of our credit unions that originations or new mortgage loans have reduced fairly quickly,” he says. “This is due to the rise in interest rates and home prices. It’s making that monthly payment harder and harder to obtain for people.”

Steven Yeakel, president and CEO of the Virginia Association of Community Banks, says bankers are still watching how interest rate hikes could affect consumer loan demands for the rest of 2022 and 2023.

“Certainly, what’s going on now does not compare to the concerns over the economy in 2019 and 2020 or the concerns in banking-customer relationships and the challenges hitting consumers primarily,” he says. “[Community banks are] just very carefully examining the data that’s there and staying in close touch with borrowers and ready to make the adjustments as they present themselves.”

Hodges notes that M&T’s homebuilding clients have also reported fewer people visiting model homes or looking to purchase. Plus, the construction of new homes is slowing down because of affordability issues, mostly around mortgage rates, Asbury adds.

On the commercial real estate side, Atlantic Union is seeing large real estate sales starting to slow down, but that can work out well for banks, Ring says. “That stuff is staying on our books longer, which is really good for us and seeing our balances be more stable.”

Similarly, refinancing has slowed down since interest rates rose above zero, VBA’s Whitehurst says. In August, the national Mortgage Bankers Association reported that mortgage applications and refinancing fell to their lowest levels in 22 years.

“If someone is interested in refinancing their home, they might be now at a rate that is higher than what they currently have, and that can make that not a good option for people,” Blau notes.

The mortgage slump has not carried over to auto loans, though, at least in the state’s credit unions. As of the first half of 2022, auto loan balances grew 12%, Blau says, and if the pace continues, it would be the biggest year for auto loan growth since 1994. In Virginia, according to a Federal Reserve report released in August, the average auto debt per capita was $5,210.

However, Blau notes, there’s still plenty of uncertainty in the vehicle market, from microchip disruptions to fluctuating gas prices.

“Inflation plays a huge part in the household budget,” he says. “Our members are weighing gas, car payments, all these factors, along with all the other elements of a budget. Finding a car payment that works can be difficult.”

Credit card crunch

Although some consumers may be wary about taking out loans, they’re increasingly leaning on credit. In the second quarter of the year, credit card balances jumped by 13%, the biggest year-over-year spike in 20 years, the Federal Reserve Bank of New York reported.

“People are tapping into credit to cover for some of those inflationary pressures,” Schools says. M&T is also starting to see balances creeping up on consumer credit cards, Hodges says.

“We’re seeing a little bit of the more moderate-income individuals and families are getting stretched thin due to inflation, and they’re starting to rely on credit for their needs,” she says. “The higher-income individuals and families are still sitting on a fairly nice cash cushion, and they really haven’t been impacted.”

What will be important to watch is credit scores, Blau says, because those heavily impact consumers’ ability to get loans with desirable interest rates. Asbury says, though, that Atlantic Union has seen an absence of credit defaults or other payment problems.

“As a bank, one of the things that is the best indicator of health is what are loan losses and credit defaults doing?” he says. “And the answer is they’re not doing anything.”

Another benchmark that banks will need to keep an eye on as interest rates continue to rise is deposit levels. In September, the Federal Deposit Insurance Corp. (FDIC) reported that fell 1.9% to $19.6 trillion in the second quarter of the year, the first time that deposits have declined since 2018, although the report notes that stimulus money during the pandemic prompted “unprecedented growth” in deposits.

In late 2020 and 2021, “we all lived in an excess deposit world, perhaps from stimulus money,” Schools says. “Well, that has all subsided and now it’s about [banks] marketing for deposits.”

Hodges notes that competition for deposits was “pretty fierce” when interest rates were at zero, and now is even more so.

“In this rising rate environment, [deposits are] extremely valuable to banks, and it’s also opened up an opportunity for businesses to actually shop for rates,” she says. “All banks are hungry for deposits right now.” 

Stairway to heaven

Nationally, CEO in 2021 reached historic highs for the second year in a row, and Virginia was no exception to this trend.

The CEOs of Virginia’s largest publicly traded companies were rewarded handsomely last year, with CEO compensation rising 4.9% year-over-year to an average $8.467 million compensation package, compared with $8.068 million in 2020.

CEO compensation data was gleaned from an annual study conducted by Equilar Inc., a California-based corporate leadership data firm. To determine executive pay, Equilar tallies salary, bonus, perks, stock awards, stock option awards, long-term awards and other compensation. Altogether, Equilar examined CEO compensation data for 56 Virginia-based public companies with annual revenues of $1 billion or more. (See data for the top 40 highest-paid Virginia CEOs of publicly traded companies at bottom of this story.)

Virginia’s most highly compensated CEO in 2021 was Michael J. Salvino of DXC Technology Co. in Ashburn, a information technology services and consulting company. His pay totaled $28.716 million, a 32% jump over 2020, when he earned $21.733 million.

That compensation bump doesn’t necessarily correlate with the company’s financial performance, however. DXC posted $16.265 billion in 2022 revenue, down 8.26% from 2021, when it reported $17.729 billion. That, in turn, was 9.44% less than the $19.577 billion DXC reported in 2020. The company’s stock was trading at $26.60 in early September, down from a high of $96.75 per share in 2018.

DXC declined comment for this story. Salvino, who is also DXC’s chairman and president, has told investors that DXC has been going through a multiyear “transformation journey” to become better focused and more cost-effective. In earnings calls this year, the company said it missed some revenue goals after encountering unexpected costs and other disruptions associated with Russia’s invasion of Ukraine, which prompted DXC to withdraw business from Russia.

In August, the company posted first quarter 2023 earnings of $3.71 billion, down 10.5% from the same period a year ago. “Our transformation journey is creating value and we are confident that we are taking the right steps for DXC in the short term that will set us up for success in the long term,” Salvino said in a statement at the time.

DXC Technology Chairman, President and CEO Mike Salvino was the highest-paid leader of a Virginia publicly traded company in 2021. The Fortune 500 tech executive earned $28.7 million last year, up from $21.7 million in 2020. Photo courtesy DXC Technology Co.
DXC Technology Chairman, President and CEO Mike Salvino was the highest-paid leader of a Virginia publicly traded company in 2021. The Fortune 500 tech executive earned
$28.7 million last year, up from $21.7 million in 2020. Photo courtesy DXC Technology Co.

Coming in second place for total compensation among Virginia CEOs of public companies was General Dynamics Corp. Chairman and CEO Phebe N. Novakovic, who received $23,553,862 in total compensation in 2021 for leading the Reston-based Fortune 500 global aerospace and defense contractor. That represented a 24% boost over her 2020 pay of $18.946 million.

General Dynamics reported $38.5 billion in 2021 revenue, up from $37.9 billion in 2020, but down from the $39.4 billion it reaped in 2019. The company’s stock hit a five-year high of $254.99 per share in March, when its General Dynamics Information Technology Inc. subsidiary won a $4.5 billion, 10-year National Geospatial-Intelligence Agency contract. General Dynamics stock was trading at $227.69 in early September.

In 2019, General Dynamics won the largest Navy contract ever awarded, a $22.2 billion multiyear order for nine Block V Virginia-class nuclear-powered, fast-attack submarines capable of launching Tomahawk missiles. That was followed by an additional $2.4 billion award in March 2021 to build a 10th Block V submarine. Construction of that submarine is expected to begin in 2024.

Coming in third place on the compensation scale was Christopher J. Nassetta, president and CEO of McLean-based international hospitality company Hilton Worldwide Holdings Inc. His overall compensation was $23.285 million, a 16% increase over his 2020 compensation of $20.058 million.

Like almost every other hospitality business, Hilton was hard hit by the and its business still hasn’t rebounded to pre-pandemic levels. For 2020 and 2021, it took in $4.307 billion and $5.788 billion in revenue respectively, well below the $9.452 billion it posted in 2019. But this summer, Nassetta said in an earnings call that, based on increased travel demand during the first half of this year, he predicted that business travel will be back “on a revenue basis equal to 2019 levels” by late 2022.

Nationally, the median pay for CEOs was $14.5 million in 2021 — a 17.1% increase from the $12.7 million media from the previous year, according to an analysis by Equilar and The Associated Press of compensation for CEOs leading S&P 500 companies for at least two years at the close of fiscal year 2021.

The highest paid U.S. CEO identified in the most recent Equilar/AP survey was Peter Kern of Redmond, Washington-based online travel company Expedia Group Inc. Kern received $296.2 million in 2021. The only other S&P CEO to earn more than $200 million last year was David M. Zaslav of New York-based entertainment conglomerate Warner Bros. Discovery Inc., with a $246.6 million pay package.

Virginia CEOs — even the most highly compensated — are paupers by comparison.

General Dynamics Corp. Chairman and CEO Phebe N. Novakovic was the second highest-paid CEO of a publicly traded company last year. In 2021, Novakovic earned $23.55 million for leading the Reston-based Fortune 500 aerospace and defense contractor. Photo courtesy General Dynamics Corp.
General Dynamics Corp. Chairman and CEO Phebe N. Novakovic was the second highest-paid CEO of a publicly traded company last year. In 2021, Novakovic earned $23.55 million for leading the Reston-based Fortune 500 aerospace and defense contractor. Photo courtesy General Dynamics Corp.

Bonus babies

In Virginia’s CEO pay horse race for 2021, the biggest drop in salary was suffered by Timothy O’Shaughnessy of Arlington-based Graham Holdings Co., a diversified conglomerate that formerly owned The Washington Post and Newsweek magazine. His total compensation dropped 77% in 2021 to $2.252 million, down from $9.633 million in 2020. 

In terms of percentage gain in compensation, the biggest winner among Virginia CEOs was Michael J. Saylor of Inc., a Tysons-based software firm best known as the world’s largest corporate holder of bitcoin. In 2021, Saylor saw his compensation go up 583% to $2.78 million, up from $407,160 in 2020.

But big winners don’t always stay that way.

In August, Saylor stepped down as MicroStrategy’s CEO, transitioning to executive chairman, amid an earnings report that tallied a $1.98 billion impairment loss on the company’s bitcoin holdings. Additionally, Washington, D.C.’s city government sued Saylor and MicroStrategy in August, alleging that Saylor and the company had engaged in a tax avoidance scheme, falsely claiming that Saylor was a resident of Virginia or Florida when his primary residence was in D.C. Saylor and MicroStrategy vigorously denied the allegations. (See related story.)

For the average Virginia CEO, Equilar’s study finds that bonuses are an important component of executive pay, accounting for about 20% of most CEO’s compensation packages. Overall, Virginia CEOs also saw increases in their 2021 bonus pay, which rose 35.9% over 2020, averaging $1.725 million in 2021, up from $1.373 million for the previous year.

Last year “was a good year, financially, for a lot of companies,” says Equilar’s director of research, Courtney Yu, explaining why bonuses and overall compensation rose significantly in 2021.

Novakovic of General Dynamics earned the biggest bonus among Virginia CEOs of publicly traded companies, reaping $6.074 million, an 111% bump over her 2020 bonus of $2.872 million.

The Virginia CEO who saw the largest percentage gain in their bonus pay last year was George Holm of Goochland County-based food distribution company Performance Food Group Co. His bonus pay rose 389% in 2021 to $1.8 million, up from $375,000 in 2020. Performance Food Group had furloughed or laid off thousands of workers and deferred 25% of its senior management’s compensation in 2020 as food orders from restaurants plummeted amid the early months of the pandemic. PFG reorganized its business segments this year to streamline operations.

Just behind Holm was Norfolk Southern Corp. CEO James A. Squires, who is on the list of Virginia CEOs for the last time this year after the company formally finished moving its headquarters from Norfolk to Atlanta in late 2021. His bonus rose from $779,625 in 2020 to a far more robust $3.465 million in 2021, a percentage gain of 344%. His bonus significantly exceeded his base salary of $1 million.

Vested interest

But neither bonuses nor salaries are the biggest driver behind a CEO’s compensation, according to Yu of Equilar. Equity compensation, which can include shares, stock options or other ownership stake in a company, constitutes the largest portion of CEO compensation these days, which is a continuing trend, he says.

“Investors have always wanted [CEO] pay to be more closely aligned with performance, and when we measure performance, we’re talking about a company’s stock price usually,” Yu says.

The more equity executives are granted, the more their compensation is tied to the company’s stock performance, which is ultimately what investors care about, he says.

As a rule, CEOs can’t cash in on their equity immediately.

“There is a vesting component to it, usually three or four years,” Yu says, so equity grants function not only as an incentive for remaining in the job, but also for continuing to perform well over the long term.

The average equity award in 2021 was $5.5 million, more than twice the average $2.6 million that CEOs received from salaries and bonuses.

The largest equity awards made to a CEO in 2021 were to Salvino of DXC Technology. His equity awards totaled $25.087 million in 2021, constituting most of his $28.7 million compensation package.

Novakovic of General Dynamics, second on the compensation list, had equity awards totaling $15.395 million, making up more than 65% of her overall compensation of $23.5 million.

Christopher Nassetta of Hilton Worldwide Holdings received an equity award of $18.274 million against total compensation of $23.285 million.

Also notable in the Equilar survey is that women CEOs are sparsely represented among the top-paid Virginia CEOs, with only three women among the 56 Virginia CEOs whose compensation was studied. That’s just over 5% — considerably less than the 14.79% of women CEOs heading up Fortune 500 companies this year.

Besides Novakovic of General Dynamics, the other two top-paid women CEOS of publicly traded Fortune 500 Virginia companies are Nazzic S. Keene of Reston-based Science Applications International Corp. () and Kathy J. Warden of Falls Church-based aerospace and defense contractor Northrop Grumman Corp.

While few in number, Virginia’s women CEOs all had a high batting average when it came to compensation.

Novakovic bested all but one of the male CEOs and all of her female counterparts. Meanwhile, Warden with Northrop Grumman posted total compensation of $19.505 million in 2021, putting her among the top 10 highest-paid Virginia CEOs of public companies, despite seeing her compensation drop slightly from $19.662 million in 2020. And Keene with SAIC received compensation of $8.343 million, a 20% boost over her 2020 pay of $6.936 million.

The highest-paid U.S. woman CEO in 2021, according to Equilar, was Roz Brewer, who last year became CEO of Deerfield, Illinois-based Walgreens Boots Alliance Inc., which owns the Walgreens pharmacy chain. Brewer last year received $28.3 million in compensation — $20.2 million of which came from equity awards. 

Nancy Bagranoff, a professor of accounting and former dean of the University of Richmond’s Robins School of Business, says there are a lot of reasons why women aren’t becoming CEOs in the same numbers as men.

“But the main one is that we nominate and promote who we know. And, unfortunately, that means the same guys who meet on the golf course or in the locker room or in a bar or get-together,” says Bagranoff, who also was dean of Old Dominion University’s College of Business and Public Administration. “They don’t mean to exclude the women, but they don’t know them in the same way.”

Companies, she says, need more women at the top.

“It’s diversity and decision-making that leads to better performance,” Bagranoff says. “Having everybody the same … does not work. Women bring something different to the table, and having those differences are really important.”

Wealth gap

Overall, many Virginia CEOs saw their base salaries increase in 2021, although most rose by single-digit percentages.

There were exceptions, of course.

The executive who saw the biggest percentage increase in base salary was Hilton’s Nassetta, whose base salary increased by 259%, to $1.255 million in 2021, compared with $350,000 the year before, when Nassetta announced in April 2020 he would forgo his base salary for the rest of the year due to the economic impact of the pandemic.

Capital One Financial Corp. founder, Chairman and CEO Richard D. Fairbank earned no salary in 2021, but that’s in keeping with his long-term practice of being paid primarily in company stock. In 2021, Fairbank received an equity award of $15.817 million and a hefty $4.55 million bonus — the second largest bonus of any Virginia CEO. That’s up from the $3 million bonus he received in 2020 for heading up the McLean-based credit card and banking company.

The ratio of  CEO pay to the median pay of employees has been watched more closely in recent years, amid concerns about the widening wealth gap. (At the beginning of 2022, the top 1% of U.S. households controlled about 32% of the nation’s wealth, according to Federal Reserve data. Meanwhile, the bottom 50% of U.S. households collectively held 2.6% of the country’s wealth.)

Among the Virginia publicly traded companies with the highest paid top executives, median employee pay rose 0.8% from 2020 to 2021, while average CEO pay increased by about 5% during the same period, according to Equilar.

The CEO-employee pay ratio varies widely in Virginia. The lowest disparity between CEO pay and worker pay last year was at Freddie Mac (Federal Home Loan Mortgage Corp.), where the median worker pay was $154,483 and CEO Michael DeVito’s compensation totaled $443,032.

The highest CEO-worker pay gulf was at Richmond-based leaf tobacco supplier Universal Corp., where CEO George Freeman made $3.67 million last year, and the median worker pay was $1,928. (Universal’s workforce is largely composed of seasonal part-time laborers, many in developing countries.)

Yu of Equilar notes that the differences between CEO and employee compensation are inextricably tied to the types of industries being surveyed.

At retail companies, for example, Yu says, “you’re going to see lower median compensation, compared to those in the technology space.”

Nationally, CEOs of the 100 top-earning U.S. companies brought home 254 times more than the average worker in 2021, according to Equilar.  

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COVID challenges continue for Va. restaurants

Liz Kincaid faced a major problem in August after the walk-in refrigerator in one of her Richmond — Max’s on Broad — broke. Her usual supplier told her the wait for the replacement part would take two months. “I have raw oysters and produce and fish and chicken,” recalled Kincaid. “I’m like, ‘What am I gonna do?'”

She got lucky. One of Kincaid’s other restaurants, Bar Solita, is across the street, so she was able to move the food from Max’s to its refrigerator. But this type of problem isn’t limited to critical refrigeration.

“The guy that sells me my equipment is like, ‘You might as well buy an oven and a fryer today. You’ll get it in two months, because with four restaurants, one of them’s bound to break,'” recounted Kincaid, of RVA , a Richmond-based company that owns and operates Max’s, Bar Solita, Tarrant’s Cafe and Tarrant’s West.

In the wake of the -19 pandemic, supply chain disruptions, backlogs, inflation and labor issues continue to be lingering causes of headaches for restaurant operators.

According to a National Restaurant Association survey of 4,200 restaurateurs conducted from July 14 to Aug. 5, 41% of restaurant operators think business conditions for their restaurants will not return to pre-pandemic levels for more than a year. The 120 Virginia restaurant operators who responded to the survey had similar responses, with 40% estimating it will take more than a year, and 27% saying conditions will never return to normal for their restaurants.

Kincaid said revenue is down about 30% from 2019 across her four restaurants, amounting to nearly $3 million in sales.

, chef and founder of Ford’s Fish Shack, thinks it could take until 2025 for his three locations — in Ashburn, Leesburg and Chantilly — to return to pre-pandemic conditions.

One reason sales are down is widespread remote work, Stafford said.

“You have employers not requiring employees to go back to work, so they’re still working from home, so we have no lunch business and then we have no happy hour business,” Stafford said. “ aren’t coming home from the office.”

Supply challenges

Restaurant owners are taking hits from supply costs, with 90% of Virginia respondents saying their total food and beverage costs are higher than in 2019, comparable to the 88% of nationwide respondents who said they’ve seen the same thing.

One example is French fries, which cost less than $1 a pound last year but are now $1.25 per pound, Stafford said. Fry cooking oil became more expensive as well, particularly sunflower oil, which has been affected by Russia’s invasion of Ukraine. Before the invasion, Ukraine was the world’s largest exporter of sunflower oil. Cooking oil is up 40% to 50% over last year, he said. (The prices are also being driven up in part by increased demand for used cooking oil and soybean oil for making renewable diesel fuel.)

Stafford’s had to raise menu prices as a result. A side of fries used to be $2 or $3. Now, they’re $5 or $6.

Kincaid’s experiences have been similar.

“Chicken, beef, pork — almost every single thing costs more today than it did before the pandemic, and we’re also seeing gas surcharges put on deliveries,” she said.

Stafford also cited increasing gas surcharges. One company charges him $7 per delivery, and he gets six deliveries a week, adding up to more than $2,000 a year.

“How do I pass that along and put it on the bottom of a check?” he asked. “Here’s your subtotal, your tax, your gratuity and your fuel surcharge. Some people are trying that, but I feel like I can’t do that. I’m trying to keep my guests coming in.”

To-go containers are more expensive as well, because Styrofoam and other plastic containers are manufactured with petroleum derivatives. Stafford estimates container costs are up 50%.

Kincaid also has seen increasing costs for paper products, including to-go boxes.

Supply chain problems have meant she’s been forced to accept alternate products. “You want to serve your takeout food in the same compostable, recyclable box that makes your food look great,” Kincaid said. “But next week, they won’t have that size, so you have to settle for a different size or something less than what you would normally serve your food in.”

Even silverware supplies are inconsistent, leading to different-patterned silverware within the same restaurant, she said.

Workforce woes

Labor also continues to be a major concern for restaurant owners. Nationwide, 86% of restaurateurs surveyed said their total labor costs are higher than in 2019, and in Virginia specifically, 91% said the same.

Almost every one of Kincaid’s employees received a raise during the pandemic, including salaried managers, she said. She also increased benefits, like offering free online telehealth services, including mental health care.

Over the last two years, Stafford’s labor costs have increased about 40%.

, managing principal of Virginia Beach-based , which owns four Which Wich franchise locations and two Your Pie locations across Hampton Roads, estimated that his costs overall are up somewhere between 8% and 15%, but said his revenue had already returned to 2019 numbers. Meanwhile, he estimated that his employees’ wages have increased between 8% to 10%.

As labor costs have increased, the pool of available workers has gone in the opposite direction. Nationally, 65% of respondents said their restaurants did not have enough employees to meet current customer demand. Sixty-three percent of Virginia respondents said the same.

Each of Kincaid’s four restaurants require 75 people to be fully staffed, and she currently has 225 employees — meaning she’s short by about an entire restaurant’s worth of workers. Although she hired more people in May and June, she won’t be able to keep them if fourth-quarter sales don’t rebound.

“It’s been really hard to hire during a pandemic, and even as it becomes an endemic, it continues to be difficult to find and retain good workers,” she said.

Along with receiving applications from people without experience in the industry, she has had applicants “ghost” her — i.e., not show up to interviews and cease communications without any explanation.

Desai has also had no-show candidates. He’s found a solution in cross-training staff on a variety of jobs, allowing him to operate with fewer employees. At any given store, he has three to five workers who can fill in as needed. That’s also helped offset other rising costs. “You’re doing a better job of training your staff and making sure they understand the importance of their job and really giving them that development so that you can run a more efficient restaurant,” Desai said.

Stafford could hire 15 to 20 employees at each restaurant, but he isn’t getting many interested applicants. It’s a bit of a puzzle, since the jobs pay well and don’t require college degrees or technical education, he said. His servers make more than $50,000 a year — some more than $70,000 — with cooks earning between $40,000 and $60,000 a year, and managers from $80,000 to $100,000 annually, he said.

“I think people have just been so scared to come back into the restaurant industry,” Stafford said. Before COVID vaccines became available, restaurant workers worried about working in closed environments.

Also, restaurant workers are tired and can’t get time off because restaurants are understaffed. Some are leaving the industry in favor of finding remote-work jobs.

Desai has been able to retain employees fairly well, he said. He credits S2K Hospitality’s career development, including training managers on how to review financial statements.

“That helps to retain employees,” he said, “because they can see that there’s a longer career path than just being a cashier or just being a server.”

Passing costs on

To counteract rising costs, restaurant owners are raising menu prices and changing menu offerings, as well as reducing hours and — sometimes — capacity. Nationally, 91% of restaurants surveyed increased menu prices, and 65% changed menu offerings. Sixty percent reduced their hours of operation, and 38% closed on days they normally would have been open.

Eighty-nine percent of Virginia restaurants surveyed increased menu prices, and 61% changed items on their menus. Fifty-six percent of Virginia restaurants reduced hours of operations, and 35% closed on days they would normally be open.

Stafford has closed his restaurants earlier and shut down sections of them. His restaurants closed for the Fourth of July this year.

Kincaid has raised menu prices several times and shrunk her restaurants’ menus.

For restaurants everywhere, “that’s kind of the crux of it,” Kincaid said. “Everything costs more, and we’re selling less.”

As the industry continues to face challenges, restaurateurs are finding alternative solutions. Kincaid found a quicker fix for the broken refrigerator at Max’s on Broad when she contacted another company, which was able to locate a slightly different part that would work. The refrigerator was repaired within a week.

“Basically, we ended up Band-Aiding it, and we think that’s going to work,” she said.

Dollar Tree names new C-suite execs after shakeup in June

After a C-suite shakeup this summer, -based Inc. is filling spots on its leadership team. This week, the company named a new chief operating officer and chief development officer.

On Monday, Dollar Tree named Michael Creedon Jr. chief operating officer. Creedon had been with Advance Auto Parts since December 2013 and rose from president of Autopart International, a wholly-owned subsidiary of Advance, a role he held for four years, to president of the company’s north division, from 2017 to 2020, to president of U.S. stores from 2020 to 2021 and then executive vice president of U.S. stores.

“I am extremely pleased to announce that Mike Creedon will be joining the Dollar Tree team as our new chief operating officer. Mike’s impressive career in is rooted in a deep knowledge and understanding of his customers,” Dollar Tree President and Mike Witynski said in a statement. “Mike will be instrumental in driving the execution of our strategy, and a key leader supporting our culture transformation in Dollar Tree, Family Dollar and Dollar Tree Canada stores.”

Before joining Advance Auto Parts, he was vice president and general manager of Sensormatic LLC’s North America sales and operations from 2010 to 2013. The company is the retail security division of Tyco International Inc. He earned his bachelor’s from Middlebury College and a certificate from the Chicago Graduate School of Business.

“I look forward to joining the Dollar Tree organization at this key stage in its transformation. We will be committed to improving the in-store experience for our shoppers, as Dollar Tree and Family Dollar are well-positioned to be a critical solve for the millions of households dealing with historic inflation,” Creedon said in a statement. “My team will be focused on improving operational processes and efficiencies to better support our store associates and field leaders, and the customers they serve. We will be focused on recruiting, training and retaining key retail associates and help them build their careers at Dollar Tree.”

On Wednesday, Dollar Tree named Pedro Voyer its new chief development officer. He previously served as the international general manager for Panera and chief operating officer of Caribou Coffee and Einstein’s Bagels, all brands owned by JAB Holding Co. Voyer also served as chief development officer for Burger King Corp.’s U.S. and Canadian portfolio, and he held leadership positions at YUM Brands, Tricon, PepsiCo International and Bain & Co. Consulting. Voyer has a degree in mechanical engineering from Universidad Simon Bolivar in Venezuela and an MSC/MBA from the Tokyo Institute of Technology/MIT.

“I am extremely pleased to announce that Pedro Voyer will be joining Dollar Tree as our new Chief Development Officer. With more than 25 years of leadership experience in the domestic and international multi-unit food and beverage industry, Pedro has a strong track record in profitable new unit growth, portfolio asset management and facility management,” Witynski said in a statement. “Pedro will lead our real estate teams to enable our long-term growth and provide customers with a shopping experience that wows them each time they visit our stores.”

Dollar Tree has more than 15,600 Dollar Tree and Family Dollar stores across the United States and Canada. In June, the Fortune 500 company parted ways with its chief operating officer, chief strategy officer, chief financial officer, chief information officer and chief legal officer. The move followed a proxy battle with activist investor group Mantle Ridge LP, which was settled in March after Dollar Tree named Richard Dreiling, former chairman and CEO of rival Dollar General, as the board’s executive chairman. Mantle Ridge CEO Paul Hilal became vice chair.

“I am eager to join the Dollar Tree team at such a pivotal time in the organization’s transformation. The Dollar Tree and Family Dollar brands have a unique opportunity for growth in what I consider to be one of the most attractive sectors in retail at this time,” Voyer said in a statement. “My teams will be committed to supporting the organization to drive sustainable new unit growth, improved store condition, productivity and profitability by enhancing the customers’ shopping experience in our stores.”

Other recent hires to Dollar Tree’s C-suite include Jeffrey A. Davis as chief financial officer in late August, and Bobby Aflatooni as chief information officer in late July.

“We continue to work aggressively in our efforts to build a world class retail leadership team that will enable us to accelerate the growth of the company. Pedro’s addition represents the sixth chief officer that has joined the company in less than five months. We are committed to delivering improved long-term operating performance for the benefit of all Dollar Tree stakeholders,” Witynski said.

In the second quarter, Dollar Tree increased sales 6.7% to $6.77 billion, up from $6.34 billion in the second quarter of 2021. It had a 14.2% increase to $2.12 billion from $1.86 billion in the prior year’s second quarter.