Concerned over the consistent underperformance of Walmart, four Walmart Associates who are shareholders have filed a resolution that will be voted on by all shareholders calling on the Wal-Mart board to review executive performance pay goals to ensure they are not creating incentives that undermine shareholder value. Today Wal-Mart Stores, Inc released its annual proxy statement to investors disclosing the annual salary paid to senior executives. According to the filing CEO Mike Duke was paid $18.1million, a slight decrease from the $18.7 million he was paid last year. Duke’s incentive compensation is largely tied to Walmart’s Return on Investment (ROI), which has been declining over the past several years. His 2012 payout would have been smaller last year had the board not lowered the target ROI, the fifth consecutive year it has done so.
Walmart shares have underperformed those of other retailers. For the three-year period ending April 12 2012, the S&P 500 Retailing index was up over 88%, while the price of Walmart shares had grown by less than 17%. Critical indicators such as same-store sales have also lagged behind other retailers, while ROI has declined for 5 years in a row. In 2011, after growing market share consistently since its founding in the 1960s, Walmart lost market share in the US for the second year in a row.
Concerns about executive pay at Walmart were raised last year when The New York Times reported that the company’s compensation committee had altered performance metrics used to award long-term incentive compensation. Specifically, by removing same-store sales from executives’ bonus formula and replacing that metric with total sales growth, The Times stated Walmart was “shifting the goal posts” on compensation policy, resulting in higher pay for CEO Mike Duke.
Shareholders will have an opportunity to weigh in on executive pay at the company this year when they cast their ballots on a new proposal which calls on the Walmart board to review executive performance pay goals to ensure they are not creating incentives that undermine shareholder value.
Mary Tifft, a 24-year Walmart employee in Kenosha, Wisconsin, and one of the shareholders who petitioned to place Proposal #6 on the ballot, said she hoped the proposal would bring more scrutiny to executive pay at Walmart. Tifft started buying Walmart shares through the company’s share purchase program in 1992, and currently owns 1,008 shares of Walmart stock.
“I’ve been a Walmart shareholder for 20 years, and an associate for even longer,” said Tifft. “Walmart used to be a good company, one that I was proud to work for, but I’m afraid the company has lost its way. We think this proposal is an important step in getting the company back on track.”
Along with Tifft, Proposal #6 is co-sponsored by Jackie Goebel, Girshriela Green and Carlton Smith, all of whom are current Walmart associates, with, collectively, over 60 years of experience with the company.
Important disclosure: The UFCW and OUR Walmart have provided technical assistance to the four shareholder sponsors of Proposal #6, and we continue to support their efforts to campaign on its behalf.