Wal-Mart puts those pinched pennies to use…

January 30, 2012

Die-hard fans of Wal-Mart Stores, Inc. (WMT) may still be reeling from last Friday’s news that the retail giant is moving its iconic greeters to further inside the store, where they can help customers or direct them to shorter check-out lines — breaking with a 30-year tradition started by the store’s founder, Sam Walton. By making the move, Wal-Mart hopes to improve its profit margins and same store sales; in essence, though, the greeter has become just another associate.

Pinching pennies at the front door may actually be helpful for the company, however, given the significant cash that Wal-Mart has promised to pony up to a couple of executives, according to an 8-K filed January 25.

One such executive is Rosalind G. Brewer, who was promoted into the role of president and CEO of Sam’s Clubs and will start her job on February 1 with a base salary of $800,000. She won’t have an employment agreement, but the 8-K revealed that her target cash bonus under the Management Incentive Plan (MIP) for the next fiscal year is set at 160% of her base salary, or $1.28 million, and she could get as much as $1.6 million.

Brewer will also get an annual equity award, including performance shares with a target value of $2,625,000 and restricted shares with a value of $875,000. The first award is subject to performance criteria over a three-year period; the second award vests on the third anniversary of the grant date.

But apparently the new salary, potential bonus, and up to $3.5 million in equity awards don’t really compensate Brewer adequately for her promotion, because the filing then adds:

“Ms. Brewer will also receive two additional awards of performance shares in connection with her promotion effective February 1, 2012, subject to approval of the CNGC [Compensation, Nominating and Governance Committee]. The first additional performance share award will have a target value of approximately $1,846,952, and will vest on the first anniversary of the grant date. The second additional performance share award will have a target value of approximately $1,797,014, and will vest on the second anniversary of the grant date.”

Thus, if the company’s performance meets whatever criteria are set by the Compensation, Nominating and Governance Committee, Brewer could get more than $3.64 million extra, which – to our way of thinking – even beats a celebratory promotion lunch at a swanky restaurant in Bentonville. Brewer also gets to use Wal-Mart’s jet for personal reasons “for a limited number of hours,” and the company is paying her relocation costs as she moves from Atlanta to Bentonville.

As for current Sam’s Club CEO and president, Brian Cornell, who joined the company in 2009, he advised his employer that he and his wife want to “move back to the Northeast for family reasons.” But even though he will cease being an executive on January 31, the filing notes that he will continue as “an associate” through April 1, 2012 (albeit one who gets “personal use of the Company aircraft for a limited number of hours”). The 2011 proxy doesn’t reveal Cornell’s base salary, but the 2010 proxy listed it as $800,000 at the time.

Although none of us will probably get an invitation to help Brewer celebrate her promotion, Wal-Mart made an announcement this morning that everyone can look forward to: The midnight party at 2,700 Wal-Marts to celebrate the DVD release of Twilight Saga: Breaking Dawn Part 1 set for February 10 is a go, complete with Edward and Bella collectibles, giveaways, and “Twilight-themed” bakery goods.

Image source: Wal-Mart, Inc.

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