Wal-Mart: A convenient recalculating of executive compensation – National Consumers League

By Sally Greenberg, NCL Executive Director

It seems that when it suits the head of the company, methods of calculating executive compensation can be changed. Wal-Mart chief executive Michael Duke has replaced the metric for determining executive compensation from same-store sales – defined as stores that have been open at least a year – to total company sales. Why? Because not surprisingly, same-store sales have declined while overall sales have increased 3.4 percent for the fiscal year. This is all documented in Gretchen Morgenson’s recent column in the New York Times.

So Duke will receive $18.7 million in compensation this year. What’s disturbing is that Wal-Mart has issued statements over the past several years about why same-store sales was such an important measure of performance. But since those sales are down, suddenly the goal posts have changed. One observer says that Wal-Mart’s decision to throw out same-store sales figures as a measure of executive compensation is “a failure to admit failure.”

In addition (and even more disturbing), Wal-Mart has decided to end its profit-sharing programs for lower-level workers. Sam Walton, who founded Wal-Mart, took great pride in these programs for workers. Many who knew Sam Walton don’t believe he would have supported the anti-worker, cutthroat strategies adopted by Wal-Mart’s executives over the past two decades. But we won’t see any such leadership from the current head of Wal-Mart, not when he has shown himself able to re-jigger the formula for determining his compensation to ensure he makes close to $20 million.