Wal-Mart Stores Inc. did not meet financial performance goals for fiscal 2015, and executive pay fell as a result.
Chief Executive Officer and President Doug McMillon earned $19.07 million for the year that ended, but saw a 24 percent decline from his financial package from the previous year. McMillon was paid $25.3 million the previous year.
Wal-Mart highlighted fiscal achievements of McMillon's first year as CEO in its proxy statement, but it noted that "our financial performance did not meet the challenging targets ... set at the beginning of fiscal 2015. Accordingly, as described below, our short- and long-term incentive pay was below target levels."
McMillon saw his base pay increase from $954,408 to $1.2 million, but his stock awards declined. McMillon claimed $14.6 million in stock awards for the year compared with the previous $23.01 million. He also missed out on an additional $1 million in bonus pay.
Wal-Mart reported a net revenue increase of 1.9 percent and a profit increase of 2.1 percent in fiscal 2015. Those numbers still weren't enough for McMillon to trigger his full incentive package.
"While our financial performance improved throughout fiscal 2015, we fell short of the challenging operating income, sales, and ROI targets established at the beginning of fiscal 2015," the company's proxy statement reads. "As a result, our CEO's annual cash incentive payout was ... once again significantly below his target payout."
McMillon has targeted improved employee working conditions, better customer experience and continued development of e-commerce as areas where the company can grow sales. Those growth areas are requiring significant investment by the company, including $1 billion targeted for pay raises, training and scheduling for Wal-Mart U.S. employees. Up to $1.5 billion has been earmarked for expenses related to e-commerce.
Wal-Mart U.S. accounts for about 60 percent of the company's annual sales. It generated $288 billion in net sales last year and posted same-store sales improvement of 1.5 percent for the fourth quarter of its 2015 fiscal year, the highest mark in nine quarters.
Greg Foran, hired last year to oversee the U.S. operation, earned $19.5 million. International CEO David Cheesewright earned $10 million, Sam's Club CEO Rosalind Brewer $9.5 million, and Global e-Commerce CEO Neil Ashe was paid $9.9 million. Chief Financial Officer Charles Holley earned $7.2 million.
"Our executive compensation program is designed to focus our leadership and balance short-term performance and long-term strategic priorities," the proxy reads. "This program also is intended to align the interests of our executives with the interests of our shareholders throughout our business and investment cycles."
Shares of Wal-Mart stock ended trading at $79.18 on Thursday. The company will hold its annual shareholders meeting June 5 at Bud Walton Arena on the University of Arkansas campus.
Information for this article was contributed by David Smith of the Arkansas Democrat-Gazette.
Business on 04/24/2015