Wal-Mart Tied Executives' Cash Bonus to Sales and Operating Income Performance -- 2nd Update

By Sarah Nassauer 

Top executives at Wal-Mart Stores Inc. needed to be more attentive to sales growth to earn their bonuses.

Wal-Mart has tied executives' cash bonus to the retailer's sales performance for its fiscal year, in addition to operating income, according to its proxy statement filed with security regulators. The year prior, executives were judged largely on the company's operating income to receive the maximum cash bonus possible.

In recent years, Wal-Mart has struggled to grow sales, especially in its core U.S. business. The retailer has notched sales growth in its last two quarters after more than a year of declines in sales excluding newly opened or closed stores. In the year ended Jan. 31, U.S. sales excluding newly opened stores rose 0.5% while overall U.S. sales increased 3% to $288 billion.

In a regulatory filing last year, the company said it planned to add a sales-related performance measures to part of the cash payment portion of salary "to emphasize the importance of sales growth as a priority for our company." Wal-Mart executives earn compensation in several forms: base salary, stock awards and a cash incentive, along with other forms of payment.

Chief Executive Doug McMillon's cash bonus in the last fiscal year was based 25% on total company sales, while 75% was based on total company operating income, according to the proxy. Former Chief Executive Mike Duke's cash payment was based entirely on total company operating income in the year prior. Other executives were also evaluated on company sales performance for the cash portion of their salary, including U.S. chief Greg Foran and Chief Financial Officer Charles Holley.

Mr. McMillon's total compensation for the year ended Jan. 31 was $19.4 million, down 24% from $25.6 million in the previous year. Mr. McMillion became Wal-Mart chief executive in February 2014. Mr. Foran, who became the company's U.S. head last year, earned $19.5 million in fiscal year 2015.

The company said its performance "did not meet the challenging targets" established at the beginning of fiscal 2015, resulting in executive pay below target levels, in the filling.

Josh Beckerman contributed to this article

Write to Sarah Nassauer at [e-mail]

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