Wal-Mart Stores Inc.
Summary:
Overall it's hard to relate management compensation to the company's results; that's a no-no for our Executive Compensation Index. Shareholders may overlook the high compensation numbers at the moment since Wal-Mart is performing so well in 2008, but we sure won't. These execs should be rewarded for their hard work, but not as much as they have received when shareholder value only increases every decade.
Sorry Wal-Mart, but you can't distract us with your cheap goods… wait, is that TV on sale for only 50 bucks?…
Analysis:
The retail industry overall has been hit pretty hard by the economy, but not everyone has been struggling. The companies that focus on cheap goods and have a strong international presence have faired the best.
Enter Wal-Mart…
Wal-Mart is the largest retailer in the world. Although they began in the United States, it's safe to say that they are well-diversified internationally. The company operates thousands of stores across the world and has about 2 million employees. In addition to its strong international presence, Wal-Mart's primary focus is being the low price leader in everything they sell. These factors have helped the company weather the recent storm in the domestic economy.
The company overall has seen strong growth in revenue, profit, and size over the last decade. In spite of this growth, however, shareholder returns have remained somewhat stagnant.
So… What Are They Paid?
Wal-Mart's executives do really well, which they should since they manage a $350 billion company. On the other hand, they ought to do better when shareholders are prospering, and worse when they are not.
Stockholders haven't been prospering lately, but management's done pretty well. While some of the areas of compensation, such as base salary and bonuses, were just average, other areas were extremely high.
Stock awards, for example, have gone up 2-3 times since 2005, but stock value has remained essentially unchanged. In fact, the stock and option awards given out were some of the highest we've seen! The CEO got $15 million in stock grants and another $8 million in options. The NEOs averaged a combined total of $10 million each for 2007.
The good news is that there aren't a lot of payments due if the company is sold. Then again, who can buy a company of this size, and one in which management owns 42% of the stock.
Compensation Details:
| CEO | NEO Avg. | |
|---|---|---|
| Base Salary | $1,300,000 | $924,308 |
| Bonus | $0 | $0 |
| Stock | $15,274,351 | $6,732,739 |
| Options | $8,081,272 | $3,060,036 |
| non-Equity Incentives | $4,285,840 | $2,304,717 |
Reference Links:
(1) Annual
Proxy Statement
(2) Annual
Report