Exec pay at Walmart not as high as it could have been

Walmart increased hourly pay for employees earlier this year but top executives didn’t earn as much as they could have after the company came up short on key metrics.

Walmart’s six top executives whose compensation is disclosed in the proxy statement still received total compensation packages that sound like lotto jackpots. However, with total company sales growth last year of only 1.9%, an operating income increase of 1% and a return on investment that actually declined slightly, the financial incentives executives received were not as rich as they could have been.

For example, cash bonuses and equity awards received for 2014 were below prior year levels for Wal-Mart Stores, Inc., President and CEO Doug McMillon, CFO Charles Holley, Sam’s Club President and CEO Rosalind Brewer and Walmart Global eCommerce CEO Neil Ashe. Prior year compensation details for Walmart U.S. President and CEO Greg Foran and Walmart International President and CEO David Cheesewright were not disclosed because they were not what Walmart defines as “named executive officers” or NEO’s for financial reporting purposes.



However, McMillion, Holley, Brewer and Ashe received salaries of $1,200,930, $885,165, $893,819 and $935,303, respectively, that were higher than the prior year. The annual salaries of Foran and Cheesewright were $1,152,850 and $846,910, respectively.



The real money Walmart top executives earn comes in the form of cash bonuses and equity awards. The top executives received cash bonuses tie to various financial performance targets that were well above the salary amounts but below the potential maximum payout established by the Board.



For example, McMillon’s received a sizable cash bonus of $2,878,272, but he left $1 million on the table because the potential payout was set at $3,840,000. CFO Charles Holley’s cash bonus was $1,349,190 as opposed to a target of $1,800,000. The executive who came the closest to achieving his full potential cash bonus was International CEO Cheesewright. He received a bonus of $2,503,813, or nearly 91% of his potential payout of $2,759,260. Walmart U.S. CEO Foran received a cash bonus of $1,273,491 compared to a potential payout of $1,612,276 and he also received a $500,000 one time bonus when he accepted his current role last summer. Sam’s CEO Brewer received $1,711,746 of her potential bonus of $2,160,000. Global eCommerce CEO Neil Ashe netted $1,618,926 of his $2,280,000 bonus potential.



Where the numbers really get big is with the equity awards and the value of those awards. For example, McMillon received equity awards valued at nearly $14.6 million while Foran’s equity compensation was actually higher at nearly $15.8 million. Brewer, Ashe, Cheesewright and Holley received equity awards totaling $6,698,382, $6,648,142, $5,598,373 and $4,798,975, respectively.



While the equity awards are sizable, in each case where prior year comparisons were available, the value of the equity awards earned were substantially less than the prior year.



In short, Walmart’s top six executives all received a salary increase last year, but failing to achieve financial performance targets meant they weren’t able to realize their maximum cash bonus and equity awards.



They shouldn’t expect a lot of sympathy from hourly employees who just got a bump to $9 a hour.