Mary F. Sammons

Mary F. Sammons
Born	1946-10-12October 12, 1946 (age 80) Portland, Oregon, United States
Nationality	American
Education	Marylhurst College (BA, 1970)
Occupation	Retail executive
Company	Rite Aid
Title	Chairman and Chief Executive Officer of Rite Aid (former)
Spouse	Nickolas F. Sammons (m. 1967)
Children	1

Mary F. Sammons (born October 12, 1946) is an American retail executive who was president and chief executive officer of Fred Meyer Stores from 1998 to 1999 and then spent more than a decade at the top of Rite Aid, the American drugstore chain. She joined the company as president and chief operating officer in December 1999, became chief executive officer in June 2003, added the title of chairman in June 2007, gave up the chief executive role in June 2010 and left the chairmanship in June 2012.

Sammons trained as a French teacher and entered retailing in 1973 as a management trainee at Fred Meyer, the Portland, Oregon, food, drug and general merchandise chain. She worked there for 26 years, rising through buying and merchandising roles to become president and chief executive of the Fred Meyer Stores operating unit shortly before the Kroger Company acquired its parent in 1999.

She arrived at Rite Aid as part of a group of former Fred Meyer executives led by Robert G. Miller that took over a company that was struggling with heavy debt and under investigation over an accounting scandal involving its previous management. While Miller handled the refinancing, Sammons ran the stores and day-to-day operations. Trade and reference publications credited her with a large part of the turnaround that returned the company to an annual profit in fiscal 2004.

As chief executive, Sammons led Rite Aid's purchase of the Brooks and Eckerd drugstore chains from The Jean Coutu Group, announced in August 2006 at a value of about $3.4 billion and completed on June 4, 2007. The deal took the company past 5,000 stores. Integration of the acquired stores coincided with the 2008 recession, and the company returned to losses during her final years in the post. She was the first woman to chair the National Association of Chain Drug Stores, and she served as an outside director of First Horizon National Corporation, StanCorp Financial Group and Magellan Health.

Early life and education

Sammons was born on October 12, 1946, in Portland, Oregon, the daughter of Lee W. and Ann (Cherry) Jackson. She finished high school in Portland and enrolled at Marylhurst College (later Marylhurst University), near the city. She married Nickolas F. Sammons on September 12, 1967, at the beginning of her sophomore year. In 1970 she graduated from Marylhurst with a bachelor's degree in French and a secondary-level teaching certificate.

In the early 1970s Sammons had a child and worked as a substitute secondary school teacher. According to the Gale Newsmakers profile, her move into business began when she answered a newspaper advertisement and was hired by Fred Meyer.

Career

Fred Meyer (1973 to 1999)

Sammons joined Fred Meyer Stores as a management trainee in 1973. At the time the company operated 137 stores across the Pacific Northwest, selling food, drugs and general merchandise. After completing the trainee programme in 1975, she became a buyer, a job she held until 1980, when she was named vice president for merchandising. In 1986 she was promoted to senior vice president with responsibility for the soft goods division, and she remained in that post for 11 years. The company's later proxy statements summarise this period by saying that from 1985 through 1997 she held several senior positions with Fred Meyer Stores, the last being executive vice president.

In 1997 Sammons was appointed executive vice president in charge of the apparel, home electronics and home group. In January 1998 she became president and chief executive officer of Fred Meyer Stores, Inc., the operating subsidiary that ran the chain's stores, then a unit of Fred Meyer, Inc. Kroger, the largest supermarket operator in the United States, agreed in late 1998 to buy Fred Meyer, Inc. for about $13 billion in stock and assumed debt, and the deal closed in 1999. From April to December 1999 Sammons continued as president and chief executive of Fred Meyer Stores as a subsidiary of Kroger.

Over the decade before the merger, Sammons had worked closely with Robert G. Miller, who was chief executive of Fred Meyer, Inc. from 1991 and became vice chairman and chief operating officer of Kroger after the acquisition. In an interview with Chain Drug Review quoted by Gale, she called Miller her mentor: "He believed in me, challenged me, told me where I needed to improve. When he accepted the job at Rite Aid, I willingly volunteered to join him, even though he hadn't asked me. I needed a new challenge where I felt I could make a difference, and this has proved to be it."

Rite Aid president and chief operating officer (1999 to 2003)

Rite Aid, based in Camp Hill, Pennsylvania, was in crisis when Sammons arrived. Its chairman and chief executive, Martin L. Grass, son of the company's founder, had resigned in October 1999 amid accounting and legal problems. Its lenders had agreed to reschedule $3.3 billion of debt, the private equity firm Leonard Green & Partners had invested $300 million, and in November 1999 the auditor KPMG resigned, saying it could no longer rely on management's representations. The Securities and Exchange Commission then opened a formal investigation. The scandal eventually led to an eight-year prison sentence for Grass.

On December 5, 1999, Sammons became president, chief operating officer and a director of Rite Aid, under an employment agreement signed that day. Miller became chairman and chief executive. Two other Fred Meyer executives came with them: David Jessick, who became chief administrative officer, and John Standley, who became chief financial officer. The division of labour was clear: Miller concentrated on the refinancing and on building a reliable financial reporting system, while Sammons was responsible for getting the drugstore business itself back on track. Miller later said that since their arrival Sammons had been responsible for running the business day to day and for leading change within the company.

The stores were in poor shape. The company's difficulty paying suppliers had left shelves empty and customers unhappy, and staff morale was low. Sammons and her colleagues held long discussions with groups of employees drawn from the company's workforce of about 73,000. She told Chain Drug Review: "When we arrived, we were confronted by a sad workforce. Nobody cared.... One of our biggest challenges was getting people to trust us as a company." To the Philadelphia Inquirer she said: "People get you to the cause of problems, not just reports and numbers. We have very committed people. They care. They'll work the extra hours. They know we'll listen. That wasn't something that had happened under the old regime."

Operationally, Sammons worked with vendors to restore a reliable flow of stock to the stores. To win back pharmacy business lost during the crisis she set up pharmacy advisory panels of company pharmacists and pharmacy managers, which proposed changes to work flow, customer service and pricing. She revived the weekly advertising circular, put more weight on customer service, and backed investment in prescription-filling robotics and in voice messaging systems that let customers order refills and choose pickup times. The new management also closed several hundred underperforming stores; Fortune, in its October 2003 list of the 50 most powerful women in American business, cited the closure of more than 400 stores and the rebuilding of supplier relationships among her contributions.

The financial recovery was gradual. In the first full fiscal year under the new team the company lost nearly $1.6 billion on sales of $14.5 billion. In fiscal 2002, ended February 28, 2002, the loss fell to $828 million on revenue of almost $15.2 billion, and in fiscal 2003 to $112.1 million on sales of $15.8 billion. In its January 7, 2002, issue, Chain Drug Review named Sammons its Chain Drug Retailer of the Year for 2001, crediting her with "leading and overseeing a dramatic metamorphosis that has, virtually overnight, transformed a drug chain on the brink of extinction into one within sight of its objective of competing on equal footing with the best drug chains in America."

Rite Aid chief executive officer (2003 to 2010)

In April 2003 the company announced that Miller would hand the chief executive role to Sammons; Miller said he had decided early on to recommend her as his successor. She became president and chief executive officer after the annual stockholders' meeting on June 25, 2003, with Miller staying on as chairman. Shortly before the handover the company completed a refinancing that included a new $1.85 billion senior secured credit facility maturing in April 2008. Sammons said the refinancing "will have a significant impact on the future of Rite Aid by giving us greater operating flexibility", and that the company was "now in a position to start working on new store development again", mainly in its strongest existing markets. At the end of that quarter it had 3,396 stores.

In late 2003 Sammons set out four short-term priorities: growing the number of prescriptions filled, increasing front-end (non-pharmacy) sales, controlling expenses and improving customer service. Pharmacy accounted for roughly 63 percent of revenue, and she pushed several initiatives to build it. By late summer 2003 the company had introduced electronic prescribing in 16 markets, working with ProxyMed and SureScripts; it nearly doubled its budget for buying prescription files from independent pharmacies in fiscal 2004; and it tested a loyalty card for older customers that returned 15 percent of the cost of a prescription as credit toward a later purchase. "The pharmacy business is a neighborhood business," she told the Harrisburg Patriot-News. "It's a store-by-store experience, as well as what your whole company is all about."

In fiscal 2004, ended February 28, 2004, the company reported net income of $83.3 million on revenue of $16.6 billion, compared with a loss of $112.1 million the year before, its first annual profit since the new management arrived. "Rite Aid returned to profitability in fiscal 2004, a year of strong and steady growth. We did it by running better stores, improving customer satisfaction and containing costs," Sammons said in the results release. She told the Patriot-News: "I believe we have turned the company around and are moving it forward."

On August 24, 2006, Rite Aid and The Jean Coutu Group of Quebec announced an agreement to merge Jean Coutu's American subsidiary, which operated 1,858 Brooks and Eckerd drugstores, into Rite Aid. Under the agreement Sammons was to remain president and chief executive and also become chairman, with Michel Coutu as co-chairman. Shareholders approved the deal on January 18, 2007, and it closed on June 4, 2007, when Sammons succeeded Miller as chairman. (The deal is covered in more detail below.)

The integration proved harder than planned. In September 2008 Sammons said that "improving the acquired stores' pharmacy business will take longer than originally expected", while describing the trends in those stores as encouraging. The company reported a second-quarter loss of $222.0 million and announced cuts to operating costs and capital spending. The same day, September 25, 2008, it announced a reshuffle of senior management: Standley, who had left in 2005 to run the supermarket chain Pathmark, returned as president and chief operating officer, and Frank Vitrano joined as chief financial officer and chief administrative officer. Both reported to Sammons, who handed the title of president to Standley and stayed on as chairman and chief executive. "This is the right time for these changes as Rite Aid focuses on delivering strong value for shareholders, suppliers, customers and associates in a challenging business environment," she said.

Succession and chairmanship (2010 to 2013)

On January 21, 2010, the company announced that Standley would succeed Sammons as chief executive on June 24, 2010, as part of the company's succession plan, and that Sammons, then 63, would remain chairman until the annual meeting in June 2012. She said she intended to be an active chairman, representing the company in industry and government affairs and helping with strategic initiatives as needed. "When I asked John to return to Rite Aid, I knew he would move swiftly to improve our company's operations," she said in the announcement. At that point the company had more than 4,800 stores in 31 states and the District of Columbia, about 99,000 employees, and fiscal 2009 sales of more than $26.3 billion.

The board amended its by-laws on the same day to make chief executive a distinct office, rather than one that had to be combined with either chairman or president. Her employment agreement was amended so that she would serve as chairman until it expired at the June 2012 annual meeting, on a base salary of $350,000 a year from February 27, 2011, with no further bonus or incentive pay.

Sammons was chairman from June 4, 2007, until June 2012. She remained an ordinary director for one more year and then told the company she would not stand for re-election at the 2013 annual meeting, ending a board tenure that had begun in 1999.

Leadership and management style

Accounts of Sammons's management stress her focus on store staff and pharmacists. Gale's business biography describes the creation of a new corporate culture as one of her priorities: she found that employees had known about the company's problems under the previous management but had been rebuffed when they offered suggestions, and she worked to convince them that their input mattered. "Our people had been trampled. They were worried about their futures and uncertain about what was going to happen," she told one trade publication. She told another, in December 2001: "There are a lot of great people here. And people bond very quickly when they're working together to overcome obstacles."

The pharmacy advisory panels were one practical result of this approach. As chairman of the National Association of Chain Drug Stores, she argued at the association's Pharmacy and Technology Conference in August 2003 that chains had to give pharmacists a real voice: "Simply put, we as an industry cannot honestly talk about the value of pharmacy unless we deliver for our pharmacists by giving them meaningful involvement in business decisions."

The Gale Newsmakers profile notes that she was regularly at company headquarters at weekends. The board's compensation committee wrote in its proxy statements that her pay was weighted more heavily toward incentive and equity awards than that of other executives, in line with its policy of tying more of a senior executive's pay to company performance.

Major deals and strategic decisions

Return to store growth (2003)

The 2003 refinancing, completed nearly two years ahead of schedule according to Sammons, pushed out the maturity of a large part of the company's debt by three years. It included the $1.85 billion secured credit facility (a $1.15 billion term loan and a $700 million revolving facility) and an issue of $360 million of 8.125 percent senior notes. Sammons used the extra room to restart new store development, which she said would focus on existing strong markets and often replace existing stores, "which we believe will deliver a much bigger and quicker payback than entering new markets."

Brooks and Eckerd acquisition (2006 to 2007)

The largest transaction of Sammons's tenure was the purchase of Jean Coutu's American drugstore business. As announced on August 24, 2006, Jean Coutu would receive $1.45 billion in cash and 250 million new shares, giving it a 32.0 percent equity stake and 30.2 percent of the voting power, and Sammons's company would assume $850 million of Jean Coutu's long-term debt. Based on the buyer's recent average share price, the deal was valued at about $3.4 billion. The business included 1,858 stores (337 Brooks and 1,521 Eckerd) and six distribution centres, mainly on the East Coast and in the Mid-Atlantic states. All were to be rebranded Rite Aid, and the headquarters would stay in Camp Hill. The two companies' combined fiscal 2006 revenues were about $26.8 billion.

At closing on June 4, 2007, Jean Coutu received $2.36 billion in cash, subject to adjustment, plus the 250 million shares. The Federal Trade Commission required the sale of 23 stores in nine states, and state orders required three more, leaving the chain with 5,160 stores. Sammons said: "These are good stores in good locations with dedicated associates. We are eager to bring them into Rite Aid, and we've got the infrastructure, management team, best practices and plan to do it." The company planned to convert all the stores to its own systems over about 16 months, to spend more than $1 billion upgrading the acquired stores and distribution centres over several years, and to open nearly 1,000 new and relocated stores over five years.

By September 2008 the integration was due to be finished by the end of that month. Same-store sales in the acquired stores were still falling, though the decline had narrowed to 4.1 percent from 6.7 percent in the previous quarter. Sammons said customers lost "during the disruption of the integration are starting to return." The company's 2009 proxy statement records a special award of $1.5 million paid to Sammons in fiscal 2008 in connection with the transaction.

Cost cuts and leadership changes (2008)

In the second half of fiscal 2009 the company cut operating expenses, reduced capital spending by about $50 million and pursued more sale and leaseback transactions to raise cash, alongside a $700 million refinancing. Bringing Standley and Vitrano back from Pathmark in September 2008 was presented as a way to help carry out a strategy "to invigorate sales, reduce costs and strengthen financial position."

Financial and market performance

Under the management team in which Sammons was chief operating officer and then chief executive, the company moved from heavy losses to a modest profit, then back into loss after the Brooks and Eckerd deal and the recession.

Selected Rite Aid results during Sammons's tenure

Period	Revenue	Net income (loss)	Source
First full fiscal year under new management (fiscal 2001)	$14.5 billion	Loss of nearly $1.6 billion
Fiscal 2002 (ended February 28, 2002)	Almost $15.2 billion	Loss of $828 million
Fiscal 2003	$15.8 billion	Loss of $112.1 million
Fiscal 2004 (ended February 28, 2004)	$16.6 billion	$83.3 million
Second quarter of fiscal 2009 (ended August 30, 2008)	$6.50 billion	Loss of $222.0 million

In fiscal 2004 same-store sales rose 5.7 percent and adjusted EBITDA (the company's preferred measure of operating profit) rose 16.0 percent to $722.3 million, or 4.4 percent of revenue. Prescriptions made up 63.6 percent of sales, and the company ended the year with 3,382 stores. After the acquisition, store numbers rose to 5,160 in June 2007 and stood at more than 4,800 in January 2010. The workforce grew from about 73,000 when Sammons arrived to about 99,000 in early 2010.

Compensation

The company's proxy statements show that Sammons's base salary was $1,000,000 a year in every fiscal year from 2004 through 2011. Her bonus target for fiscal 2009 was 200 percent of base salary. Total reported compensation was $4,270,966 in fiscal 2007, $5,247,976 in fiscal 2008 (including the $1.5 million special award tied to the Brooks and Eckerd deal) and $2,536,396 in fiscal 2009. The 2011 proxy reported totals of $3,207,359 for fiscal 2010 and $2,883,051 for fiscal 2011, her first year after stepping down as chief executive.

During the downturn Sammons declined incentive payments she was entitled to. For fiscal 2009 she turned down a bonus of $344,000 under the annual plan, which was paid to other managers, and a three-year cash performance award of $27,446. For fiscal 2010 she declined a further performance award of $95,174.

Other reported benefits included a supplemental executive retirement plan credited with $20,000 a month, a $12,000 car allowance, and personal use of company aircraft, valued at $207,733 in fiscal 2008. Her severance terms, set in the 2010 amendment, were three times the sum of her base salary and annual target bonus. When her employment agreement expired in June 2012, she became entitled to company-paid medical benefits for the rest of her and her husband's lives.

Board memberships and outside roles

• National Association of Chain Drug Stores: In May 2003 Sammons became the first woman to chair the trade association, for a one-year term. The Gale Newsmakers profile says she chaired it twice, from 2003 to 2005. She later sat on its executive committee and its board.
• First Horizon National Corporation: The board of the bank holding company (then First Tennessee National Corporation) elected her a director in October 2003. She served on its compensation and nominating and corporate governance committees and resigned on November 19, 2008.
• StanCorp Financial Group: She was a new nominee to the board of StanCorp at its 2009 annual meeting and joined its audit and nominating and corporate governance committees. Its 2015 proxy dates her board service from 2008 and lists her term as running to 2017.
• Magellan Health: She was appointed to the board of the specialty health care manager in July 2011 because of her experience in health care and pharmacy, and was elected by shareholders in 2012. She later chaired its compensation committee, and retired from the board at the 2018 annual meeting.
• The Rite Aid Foundation: She was a director and later president of the company's charitable foundation.
• Children's Miracle Network: She was a member of the charity's board of governors.

Personal life

Sammons married Nickolas F. Sammons in 1967, and they have one child. While Sammons ran the drugstore chain the couple lived near its headquarters in Camp Hill, Pennsylvania.

Philanthropy

Sammons's charitable work recorded in the sources was connected to her company and industry roles: Sammons led the Rite Aid Foundation and sat on the board of governors of the Children's Miracle Network. No personal gifts by her with named amounts were found in the sources consulted.

Recognition

• 1987: Woman of Achievement, YWCA of Portland, Oregon
• 2001: Chain Drug Retailer of the Year, Chain Drug Review (announced January 2002)
• October 2003: Named by Fortune to its list of the 50 most powerful women in American business, and listed regularly afterwards

See also

• Rite Aid
• Fred Meyer
• Kroger
• Robert G. Miller
• John T. Standley
• The Jean Coutu Group

External links

• Rite Aid official website