Insane. At my company (OMX), anything that EVER goes above store level (i.e. district manager or corporate offices) results in big penalties for the store (loss of jobs, reprimanding), and major apologizing to the customer, as well as some kind of compensation for them, free stuff, gift cards, whatever.
I honestly wish my company wasn't such a whore sometimes, most managers will bend over backwards for the customer, because sales are sales and result in bigger bonuses for them.
In my opinion, anything the customer gets away with within the bounds of normal shopping is free game. Price errors, coupons, whatever. But tighten that shit up the second they leave so it can't happen again.
For example, Recalled items are sometimes marked down to .01 as to kind of put a red flag up for the store to send it back to corporate. If a customer finds that item in the store, I'll gladly sell it to them, and then pull all the others off the shelf.