(Bloomberg) — Walgreens Boots Alliance Inc. has frozen pay for senior U.S. executives as the drugstore chain undertakes a $1.5 billion cost-cutting program, the company said at an analyst meeting Wednesday.
Walgreens is in the middle of closing 200 of its 8,232 U.S. stores and will reorganize its corporate and field operations and revamp its technology. Those moves will save $500 million, adding to $1 billion in cost savings announced in August.
The pay freezes, instated in November and applicable solely to the U.S. Walgreens executives, were a way to demonstrate that the company will start with its leadership as it reduces expenses, Michael Polzin, a Walgreens' spokesman said.
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"They should lead the way in terms of who is impacted," Polzin said in an e-mail.
Acting Chief Executive Officer Stefano Pessina isn't taking a salary while the company searches for a replacement. That decision is not related to the pay freeze, Polzin said. Pessina is the company's largest shareholder.
The company's shares fell 0.7 percent to $91.35 at 2:32 p.m. New York time.
The drugstore chain has experienced decreases in foot traffic in its U.S. retail shops for the better part of three years, according to filings.
Walgreens spent $15.3 billion to buy the rest of Alliance Boots last year, after previously controlling about 45 percent of the company.
With assistance from Danielle Burger in New York.
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