Wal-Mart Stores Inc. released compensation packages Wednesday showing a slight increase for its top executive in fiscal 2016 and revealed plans to shrink the company's board in efforts to become nimble.
Chief Executive Officer Doug McMillon earned $19.6 million in total compensation for fiscal 2016, according to the company's proxy statement Wednesday. McMillon's compensation was a 2 percent increase from the previous year, when he earned $19.07 million in total compensation. Two years ago, McMillon earned $25.3 million.
His fiscal 2016 pay included a base salary of $1.26 million, which was an increase from $1.2 million a year ago. McMillon also received another $18 million in other compensation, including $14.2 million in stock awards and $3.4 million in nonequity incentives. The company's fiscal year ends with January.
"Our executive compensation programs are intended to motivate and retain key executives, with the ultimate goal of generating strong operating results and delivering solid returns to our shareholders," Wal-Mart said in its statement. "We have developed our compensation programs to support our enterprise strategy and to align our leadership team with our culture, strategy, and structure."
In addition to executive compensation, the company also revealed its board will shrink from 15 to 12 members as part of Wal-Mart's objective to become more nimble.
Among the changes, Jim Walton, who is the son of Wal-Mart founder Sam Walton, will not be up for re-election.
Walton, 67, has been a board member since 2005 and in March was ranked No. 15 on the Forbes list of top 20 billionaires worldwide with a net worth of $33.6 billion. His son Steuart Walton is being recommended for election.
"The board has challenged management to accelerate the pace of our strategy of change even further," Wal-Mart spokesman Randy Hargrove said. "It's important for the board to be actively engaged. By reducing the size, we believe it will promote greater engagement, more efficiency and speed."
Wal-Mart noted fiscal 2016 "marked the beginning of a transformational period" for the company as it continued to implement strategies to "become the first company to deliver a seamless shopping experience at scale."
The retailer's net income of $14.7 billion for the fiscal year was a 10.2 percent decline from the previous year, and annual revenue also fell, 0.7 percent to $482.1 billion.
As a result, the company said annual cash-incentive payments were "below target levels."
McMillon had an opportunity to receive a $4.07 million cash bonus but instead earned $3.4 million. It equaled 83.7 percent of the target payout. It was an increase from last year, when McMillon's 75 percent of the target payout netted a $2.8 million bonus.
David Cheesewright, who overseas the company's international operation, earned a $2.47 million cash bonus, which equaled 98.6 percent of the target payout. Greg Foran, who is head of Wal-Mart's U.S. Operation, earned a $1.8 million bonus, or 76.5 percent of the target payout.
Cheesewright earned $10.2 million in total compensation in fiscal 2016, and Foran was paid $11.5 million. Neil Ashe, Wal-Mart's global e-commerce CEO, earned $10.8 million, and Sam's Club CEO Rosalind Brewer $8.4 million.
Chief Financial Officer Brett Biggs, who was appointed to the role on Jan. 1, earned $8.5 million in compensation. Former CFO Charles Holley earned $2.8 million.
Regarding figuring compensation, 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.
Approval of the executive compensation will be part of the company's agenda at its annual shareholders meeting, which will be held June 3 in Bud Walton Arena on the University of Arkansas campus in Fayetteville. Wal-Mart will consider three shareholder proposals during its annual meeting, and the company recommends shareholders to vote against each.
Directors up for election are McMillon, Steuart Walton, James Cash Jr., Pamela Craig, Timothy Flynn, Thomas Horton, Marissa Mayer, Greg Penner, Steven Reinemund, Kevin Systrom, Rob Walton, and Linda Wolf.
In addition to Jim Walton’s departure, former CEO Michael Duke, Roger Corbett and Aida Alvarez will not be up for re-election. Duke has been on the Wal-Mart board since 2008.
“We’ve made the changes to the way the board operates to maximize our effectiveness as we continue to adapt to customer needs,” Hargrove said.
Business on 04/21/2016