Costco’s CEO is an unlikely risk taker

By Nathaniel Meyersohn, CNN

New York (CNN) — Ron Vachris does not fit the profile of a typical risk-taking executive.

Vachris started at Costco as a forklift driver in 1982 while he attended community college. He went on to manage Costco’s warehouses on the West Coast before he was tapped to lead the company’s real estate division in 2015.

“I was quite shocked” about being asked to run the real estate division, Vachris later said in a rare interview. “All my experience was in operations and running warehouses.”

In 2024, more than 40 years after Vachris started at Costco, he became the company’s third-ever CEO.

“I’m not the exception” among company leadership, he said. “We have a very humble group out there” that’s not focused on “recognition (or) being on a pedestal somewhere.”

But over the past year, Costco has taken a major risk by adopting visible public stances at odds with President Donald Trump’s agenda. That makes Costco one of the few big companies to defy the administration — and get away with it.

Costco rarely takes the lead on controversial political or social issues, and its actions have been measured. But the company’s positions have drawn attention during a period when many companies are self-censoring or changing their policies to fall in line with Trump.

While dozens of companies have dropped diversity, equity and inclusion (DEI) policies, Costco stood behind DEI. Costco’s decision won it business from progressive customers, and it did not suffer with conservatives.

Costco also sued the administration over tariff refunds, risking government backlash.

But Costco, so far, hasn’t faced blowback. The company is more inoculated than others to take these positions because of fierce customer and employee loyalty to the brand, analysts say.

Customers pay an annual membership fee to shop at Costco, and more than 90% renew each year. The company also has some of the lowest employee turnover rates in the retail industry, driven in part by offering wages above its competitors.

“You look at who’s running the company today – we all came up through the ranks” of Costco, Vachris said in an interview last year. “Retention is core to the company’s success.”

Costco, which does not have a media relations department and rarely speaks to the press, declined an interview request for Vachris.

“Costco’s got a really good bipartisan reputation. Everyone loves it. It’s cheap as hell and treats its workers well,” said Alison Taylor, a clinical associate professor of business and society at the NYU Stern business school. “They know the lane they’re in, and they have not really wavered.”

‘I am not prepared to change’

Costco’s decision to hold steady on DEI programs last year came as Target, Walmart, McDonald’s and other companies scaled back their diversity programs in response to opposition from the Trump administration.

Trump issued an executive order targeting DEI programs in the public and private sectors the day after he returned to the White House.

He also threatened investigations and legal action – and his administration appears to be following through.

On Wednesday, the US Equal Employment Opportunity Commission said it’s probing Nike over allegations that the company discriminated against White employees. Nike said it was a “surprising and unusual escalation” and that the company’s policies are lawful.

Costco, never an outspoken supporter of DEI, did not outwardly tie its brand to diversity and inclusion as closely as other companies. The chain has a chief diversity officer and a supplier diversity program, but 80% of management is White.

Costco, however, said it remains committed to its DEI goals. The company’s board of directors last January unanimously recommended that shareholders vote against a proposal last year from a conservative group that would have required Costco to examine the financial risks of maintaining its diversity programs.

Boards typically oppose activist shareholder proposals, but Costco’s board also made a case for why DEI was good for business.

“Among other things, a diverse group of employees helps bring originality and creativity to our merchandise offerings, promoting the ‘treasure hunt’ that our customers value,” Costco told investors in a proxy statement.

Vachris has also touted the benefits of a diverse workforce.

“I don’t want to be surrounded by a bunch of people like me,” he said in the 2024 interview. “I want to have different views and opinions, and different ways to look at things — and diversity really lends to that very well for us.”

More than 98% of Costco shareholders voted against the anti-DEI proposal. The vote galvanized support for Costco from civil rights leaders and customers on the left. Supporters contrasted Costco’s move with Target, which had backtracked on DEI.

Vachris last year defended the company’s diversity and inclusion practices to a customer who sent an email concerned that Costco hired based on “skin color” or “gender identification,” according to the Wall Street Journal.

The CEO responded in an email that Costco had never used hiring quotas and was focused on giving all workers the same opportunities.

“If these are the policies you see as offensive, I must tell you I am not prepared to change,” he said.

Taking on Trump

Later in the year, Costco took an even bolder stand. The company sued the Trump administration over tariffs.

Costco joined a lawsuit that contended Trump overstepped his emergency powers by imposing sweeping tariffs – and claimed it’s due a refund.

Costco is working to offset the cost of tariffs and is raising prices selectively.

Costco will “rise to this challenge” by using its size advantage and broad range of suppliers to minimize the effect of tariffs, Vachris said on an earnings call in March. The company did not say how much it had paid in tariffs since the start of Trump’s second term.

Costco wasn’t alone in the lawsuit — Bumble Bee Foods, Ray-Bans parent EssilorLuxottica, Revlon and Kawasaki Motors also joined. But Costco was the highest-profile public company to do battle with the White House on tariffs.

Few major corporations have been willing to publicly stick their necks out to combat Trump’s policies. Companies quietly avoid conflict while seeking favor with ornate gifts, large donations to the president’s pet projects and strategic deployments of CEOs to the Oval Office.

But tariffs are broadly unpopular with Americans, who connect them with the country’s affordability crisis. This gave Costco some cover to sue the administration, business analysts say.

“That was a risk. It’s fascinating they got away with it,” said Alison Taylor from NYU. “I think the administration knows that going after Costco isn’t going to work.”

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