May 1, 2017
Target slashes CEO pay package after bleak year
May 1, 2017
Target Corp's Chief Executive Brian Cornell took a sharp cut in compensation after the company failed to meet financial goals in a year marred by declines in sales and share price.
Cornell's cash-and-stock compensation fell by nearly a third to $11.3 million, according to a document filed with regulators two months after the company reported results that sent its stock tumbling to two-and-a-half-year lows.
As per Target's short-term incentive plan, Cornell's compensation was based on the performance of two financial metrics: incentive EBIT, which makes up 75 percent of Cornell's stock component, and the rest on adjusted sales.
Target said it missed its 2016 incentive EBIT goal of $5.74 billion by $623 million and fell short of its adjusted sales target of $71.62 billion by $2.13 billion.
"This looks pretty normal in terms of executive compensation and, I think, it is actually good executive compensation in a turnaround situation," said Paul McConnell, managing director at Board Advisory LLC, an executive compensation, performance and succession advisory group.
"You shouldn't be getting rich when you are producing rotten numbers," McConnell said.
In contrast, bigger rival Wal-Mart Stores Inc gave CEO Doug McMillon a 13 percent pay hike, following strong sales performance at the world's largest retailer.
CEOs of department store operators Macy's Inc and Kohl's Corp also received pay hikes, as they met at least one of their intended operational targets for the year.
While the pay of Kohl's CEO Kevin Mansell rose 2.7 percent for 2016, Terry Lundgren, his counterpart at Macy's, received a 15.3 percent hike.
Target, which has been trying to turn itself around by sprucing up existing outlets and opening more smaller format stores, reported a fall in same-store sales for the third straight quarter in February and warned that its sales and profit estimates for 2017 were too high.
Target's stock fell to levels last seen in 2014, following the warning, and is currently down 10 percent in the one year to January 28, 2017.
Cornell, who joined Target in 2014, received a total pay package of $28.2 million that year, out of which 97 percent was in stock. According to Monday's filing, his stock component had plunged 65 percent to $9.7 million.
© Thomson Reuters 2023 All rights reserved.