Wal-Mart’s McMillon paid $25.3 million in fiscal 2014

New President and Chief Executive Officer Doug McMillon is Wal-Mart’s top earner for the retailer’s 2014 fiscal year. He is shown in this file photo.
New President and Chief Executive Officer Doug McMillon is Wal-Mart’s top earner for the retailer’s 2014 fiscal year. He is shown in this file photo.

Correction: Wal-Mart President and Chief Executive Officer Doug McMillon was given a compensation package worth $25.3 million for the retailer’s 2014 fiscal year, which ended Jan. 31, that included $23 million in performance-based incentives. A headline in Thursday’s edition incorrectly said McMillon has received that money. McMillon’s incentive package will be paid only if Wal-Mart meets performance goals tied to growth, leverage and returns, according to company spokesman Randy Hargrove. The story incorrectly said the payments would be tied to McMillon meeting the company’s goals.

While Wednesday’s proxy statement indicated none of the executives received bonuses in fiscal 2014, they did receive incentive payments listed as “non-equity incentive plan compensation,” which Hargrove described as “bonuses” that were less than allowed under the company’s cash incentive plan.

And, Wal-Mart’s worldwide eCommerce business pulled in $10 billion in sales during fiscal 2014 and is expected to generate $13 billion in fiscal 2015. The story incorrectly stated the years for the sales figures.

Wal-Mart’s top earner for the retailer’s 2014 fiscal year is new President and Chief Executive Officer Doug McMillon, whose total compensation package doubled to $25.3 million, according to a Wednesday filing with the federal Securities and Exchange Commission.

McMillon’s pay includes his $954,000 salary and more than $24 million in other compensation including stock awards and nonequity incentives - a 97.2 percent increase from his fiscal 2013 earnings of $12.8 million, which included a $930,000 salary and other compensation. Wal-Mart’s 2014 fiscal year ended Jan. 31; its fiscal 2015 is well underway.

McMillon took the helm of the world’s largest retailer and the nation’s largest private employer Feb. 1. He started with Wal-Mart as a summer worker in a distribution center in 1984 and has been with the company full time since 1990. His previous positions within the company included president and CEO of Wal-Mart’s Sam’s Club and international business segments.

As the company’s youngest CEO, industry insiders believe McMillon, 47, will have plenty of time to earn substantially more in pay and stock options. Wal-Mart does not have contracts with its executive officers; all are employed on at “at-will” basis, the company has said.

“Walmart has a rich history and is well positioned for the future,” McMillon said in a letter to shareholders.

“With greater convergence of digital and physical retail, we’re investing in capabilities to provide customers even more choice and convenience. When I think about all these capabilities, I’m confident in Wal-Mart’s continued growth and am enthusiastic about our future,” he said.

In the past 52 weeks, the retailer’s stock has ranged from a low of $71.51 to a high of $81.37. Wal-Mart stock closed Wednesday at $78.04, up 48 cents.

Wal-Mart’s 98-page proxy statement also serves as official notice of Wal-Mart’s annual shareholders’ meeting, which is set to start at 7 a.m. June 6 at the University of Arkansas at Fayetteville’s Bud Walton Arena. Shareholders who wish to vote on matters established in the proxy must have owned stock as of the close of business April 11.

The meeting agenda includes electing 14 directors recommended by the company, approving compensation for McMillon and other Wal-Mart executives and voting on three shareholder proposals. Wal-Mart opposes the three proposals.

The slate of directors up for re-election does not include two of its longest-serving members: former Wal-Mart President and CEO Lee Scott, and Christopher Williams, chairman and CEO of The Williams Capital Group LP. Both have been on the board more than a decade.

“Our corporate governance guidelines provide that our independent directors generally retire after 10 years,” Wal-Mart spokesman Randy Hargrove said.

Scott joined the board when former CEO David Glass left the board. With McMillon’s predecessor,Mike Duke, on the board, it’s only natural that Scott retire, Hargrove said. Scott was CEO from 2000-09.

The remaining board members up for re-election are McMillon, Aida Alvarez, James Cash, Roger Corbett, Pamela Craig, Doug Daft, Mike Duke, Tim Flynn, Marissa Mayer, Mc-Millon, Greg Penner, Steven Reinemund and Linda Wolf as well as Wal-Mart founder Sam Walton’s sons Rob Walton and Jim Walton. Craig and McMillon both joined the board in November. The news of McMillon’s appointment came when he was named to succeed Duke as president and CEO.

McMillon’s $23 million in stock awards are to be realized over the next three years and only if he meets Wal-Mart’s performance goals tied to growth, leverage and returns, Hargrove said.

“We’re a pay-for-performance company,” he said.

The Arkansas Democrat-Gazette follows a formula developed by The Associated Press that reflects amounts identified in proxy statements that are actually paid to executives.

The company’s year-over year operating income was lower than expected - $26.9 billion in fiscal 2014, down from $27.7 billion in 2013. As a result, the company’s top six executives received no bonuses in 2014.

Not all performance metrics are financial-based. Last year, the company’s audit committee set specific compliance goals in the wake of internal and federal investigations relating to allegations that the company bribed government officials in Mexico and other countries.

Wal-Mart “had achieved significant progress in enhancing its compliance program,” according to its Global Compliance Program Report for Fiscal Year 2014. Wal-Mart has spent more than $500 million in attorney fees and has hired more compliance personnel since the investigations were brought to light in 2012.

As the company said in 2013’s proxy statement, “If, in the judgment of the Audit Committee, the company had not achieved adequate progress in implementing the fiscal 2014 compliance objectives, then the [Compensation, Nominating and Governance Committee] could have exercised negative discretion to reduce or eliminate the fiscal 2014 cash incentive payments.”

Neil Ashe, president and CEO of the Wal-Mart’s Global eCommerce segment, received about $13.2 million in compensation in fiscal 2014. He received at least $8.4 million in compensation in fiscal 2013, though it couldn’t be determined whether he exercised any stock options that year.

The retailer’s worldwide eCommerce business was expected to pull down $13 billion in fiscal 2014 revenue, up from $10 billion the year before. His role is an important one as Wal-Mart competes with online retail giant Amazon.com.

Compensation for Bill Simon, president and CEO of Wal-Mart U.S., rose nearly 10 percent, from $11.9 million to $13 million as he leads the company’s campaign to return manufacturing jobs to the United States from overseas.

Executive Vice President and Chief Financial Officer Charles Holley experienced a slight drop in pay - just over 1 percent to $8.1 million - while Sam’s Club President and CEO Rosalind Brewer saw a 19 percent drop in her pay. She went from $14.4 million in 2013 to $11.7 million in 2014. Duke’s pay dropped by more, 72 percent to $7.6million, likely because he stepped down as CEO.

Shareholders can vote online at www.proxyvote.com or by telephone at (800) 690-6903 until midnight the day before the meeting. They also can vote by proxy card, which will be mailed to them and can be returned by mail; by scanning a QR code that’s on the mailed proxy card; or in person at the June 6 meeting.

Information for this article was contributed by David Smith of the Arkansas Democrat-Gazette.

Front Section, Pages 1 on 04/24/2014

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