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Good-bye the Wal-Mart way…

We’ve dinged Wal-Mart Stores (WMT) in the past for the contrast between the largesse it showers on top executives and the penny-pinching savings it extracts from vendors — see this April 2010 post, for example.

This time, however, Wal-Mart may actually have used that famous bargaining acumen to get more than it’s giving to a departing executive.

The company on Tuesday announced the retirement of Eduardo Castro-Wright, who has the jaw-breaking title of “Vice Chairman, President and Chief Executive Officer, Global eCommerce and Global Sourcing of Wal-Mart Stores, Inc.” (We wonder if they managed to fit all of that on a business card!) He’ll be stepping down on July 1 next year, a few months after the company plans to have a replacement lined up. The bare bones of his retirement benefits (available in an 8-K filed Tuesday) have been covered — by The Wall Street Journal’s Miguel Bustillo, for one — but there’s more to it than meets the eye.

Castro-Wright is scheduled to keep collecting his $1-million-a-year salary until January 31 (by which time the company plans to name new leaders for its global e-commerce and sourcing units), and then he’ll drop down to $666,250 until stepping down on July 1. He’ll get his usual bonus, whatever that turns out to be, for the fiscal year ending this coming January 31 (it was $1.9 million last time around).

In terms of severance — or as his Retirement Agreement calls it, “Certain Payments” — he’ll get a total of $2.1 million cash in three unequal payments; Wal-Mart will continue his health benefits for up to 18 months (which is the minimum required by law, we’re pretty sure). And Castro-Wright gets to keep 42,035 shares of restricted stock he was awarded in January 2008. Instead of vesting on January 21, 2013, they’ll vest on his retirement. All other equity, unless it vests before his July 1 departure date, “shall be forfeited.”

And that’s it. (Unless we’re missing something; this is, after all, Wal-Mart, which has one of the most convoluted deferred-comp plans we’ve ever tried to decipher. Any company that can sponsor that plan could obfuscate an 8-page retirement agreement if it wanted to.) The agreement says explicitly that Castro-Wright isn’t entitled to any additional benefits, and he doesn’t even get to take an iPad home. Indeed, the agreement specifies that he must return

“equipment (including but not limited to computers, hand-held computing devices (e.g., TreâÙ, Goodlink, Blackberry, etc., cell phones, computer files, keys, ID—s, credit cards, etc.)…”

So we looked for the loophole. Maybe, we thought, the equity he’s giving up mostly consists of under-water options, and the $2.1 million more than makes up for it. But that’s not the case. Our back-of-the-envelope calculations, based on proxy disclosures of Castro-Wright’s equity holdings and recent Wal-Mart stock quotes, suggests quite the opposite.

While options on a bunch of his shares (about 57,000) are indeed underwater, and much of his equity is scheduled to vest after his retirement (options on 124,000+ shares and more than a half-million shares of restricted shock), he’s giving up far more than he’s getting: something like $24.7 million in restricted stock (473,870 shares) and options on 143,206 shares (all which are in the money or close to it).

That WSJ article has some additional background on Castro-Wright’s personal and professional history — noting, for example, that he had left Bentonville, Arkansas, for California while caring for his ill wife, and that he was effectively demoted after online strategy stumbled — so it’s not clear just what prompted his departure. But needless to say, this isn’t the kind of thing we’re used to seeing at big companies, much less those that tend to reward their top executives as handsomely as the post-Sam Walton Wal-Mart has.

Still, it’s early days. Retirement agreements can be rewritten (and have been, at times), and there’s still the matter of what Wal-Mart will pay to promote or lure away Castro-Wright’s unknown successors.

In the meantime, don’t fret for Castro-Wright. We’re pretty sure he’ll be OK financially: His deferred-compensation balance with Wal-Mart, as of the end of its last fiscal year was $16.2 million, and he directly or indirectly holds 442,342 shares of Wal-Mart stock worth some $23 million.

Image source: Company website

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