Wal-Mart CEO Duke’s Pay Rises to $20.7 Million Last Year

Wal-Mart Stores Inc. (WMT) Chief Executive Officer Mike Duke got a 14 percent raise in pay to $20.7 million as the retailer, trying to recover from a weak start this year, tied future bonuses to compliance controls.

Duke, 63, was paid a salary of $1.32 million in the fiscal year ended Jan. 31, up 4 percent from a year earlier, Bentonville, Arkansas-based Wal-Mart said in a filing yesterday. His total compensation included $13.7 million in stock awards and $4.37 million in bonus payments.

Wal-Mart in February forecast first-quarter profit that trailed analysts’ estimates as an increase in payroll taxes and delayed refunds curtailed expenditure by its lower-income customers. Comparable-store sales in the 13 weeks ending April 26 are projected to be little changed because of slower sales in the first few weeks of the quarter, the company has said.

Starting this fiscal year, the company has added a “compliance component” to executive bonus evaluations. During the year, the senior leadership team will evaluate compliance policies, processes and controls and prepare a timetable for implementing improvements that will “address key components of a corporate compliance program,” Wal-Mart said in the filing.

Photographer: Jason Alden/Bloomberg

Mike Duke, chief executive officer of Wal-Mart Stores Inc. Close

Mike Duke, chief executive officer of Wal-Mart Stores Inc.

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Photographer: Jason Alden/Bloomberg

Mike Duke, chief executive officer of Wal-Mart Stores Inc.

Senior management will provide quarterly reports on progress in implementing “compliance objectives.” If the audit committee judges “adequate progress” hasn’t been made, cash incentive compensation will be reduced or eliminated.

Internal Probes

Duke has also agreed that if sufficient progress on compliance isn’t made by the end of the year, some of his 2013 cash incentive payment will be returned to the company.

Wal-Mart last year began investigating allegations that executives in Mexico paid more than $24 million in bribes to speed the retailer’s expansion there and has since said it also is probing operations in Brazil, India and China. The retailer said March 26 that it is spending money on its internal probes, responding to information requests from government investigators and defending shareholder lawsuits.

The U.S. Department of Justice and the Securities and Exchange Commission as well as federal and local government agencies in Mexico are investigating the allegations that Wal- Mart systematically bribed Mexican officials.

Wal-Mart in December named Karen Roberts general counsel as her predecessor, Jeff Gearhart, focuses on global compliance efforts. That followed the company combining its compliance office with ethics, investigations and legal functions to form one organization in October.

Shrinking Board

The board may shrink to 14 in June when three independent directors leave, according to the proxy.

Jim Breyer, the lead director and a board member since 2001, M. Michele Burns, a member since 2003, and Arne Sorenson, a director since 2008, won’t stand for re-election, according to the proxy.

In the filing yesterday the company said Chief Financial Officer Charles Holley received $6.64 million in total compensation in the last fiscal year, a 30 percent increase from the previous year. Bill Simon, Wal-Mart’s U.S. chief, was paid $11.2 million in total, up 33 percent.

Doug McMillon, head of international business, received $9.56 million in total pay, a decline of 13 percent from a year earlier. Rosalind Brewer, who was named president and CEO of Wal-Mart’s Sam’s Club unit in January, received $14.6 million in total compensation.

Wal-Mart rose 0.8 percent to $78.62 at 10:42 a.m. in New York. The shares had advanced 14 percent this year through yesterday, compared with a 9.6 percent gain by the Standard & Poor’s 500 Index.

To contact the reporters on this story: Lindsey Rupp in New York at lrupp2@bloomberg.net; Renee Dudley in New York at rdudley6@bloomberg.net

To contact the editor responsible for this story: Robin Ajello at rajello@bloomberg.net

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