Wal-Mart's CEO paid $20.7M in 2012

[April 23, 2013]  NEW YORK (AP) -- Wal-Mart Stores Inc. gave its CEO Mike Duke a pay package in 2012 worth $20.7 million, a 14 percent increase from the year before, according to an Associated Press analysis of a regulatory filing Monday.

Duke's performance-based cash bonus jumped more than 50 percent for a year that saw the world's largest retailer posting strong financial results despite a challenging economy for its low-income shoppers.

The pay rise came despite allegations of bribery in Wal-Mart's Mexico operations that surfaced a year ago. The company, based in Bentonville, Ark., has launched its own investigation and is working with government officials in the U.S. and Mexico.

In the regulatory filing, Wal-Mart said that starting this year, it will tie some of Duke's compensation, and that of other top executives, to the discounter's success in fortifying its compliance program. Compensation has been traditionally based on such financial measures as sales and operating income.

Duke, 63, has been Wal-Mart's CEO since February 2009. He received a base salary of $1.3 million, up 4 percent from the year-ago period. His stock awards of $13.6 million rose 4 percent. His performance-based cash bonus soared to $4.4 million from $2.9 million, according to documents filed with the Securities and Exchange Commission.

Duke's other compensation amounted to $644,450, up from $377,258 in the previous year. The perks included $101,947 for the use of the company aircraft. He also received $644,450 in above market interest credited on deferred compensation.

For the latest year ended Jan. 31, Wal-Mart posted a 5 percent increase in sales to $466.1 billion. That figure excludes membership fees from Sam's Club. Wal-Mart's operating income rose 4.7 percent to $27.8 billion in the latest year. Wall-Mart's stock rose 14 percent in 2012, compared with a 13 percent gain in the Standard & Poor's 500.

Wal-Mart, which draws nearly 10 percent of all nonautomotive spending in the U.S., saw its U.S. business come back starting in late 2011 after grappling with an almost two-year slump resulting from mistakes it made in pricing and merchandising. To re-ignite its U.S. business, which accounts for about 60 percent of its total sales, Wal-Mart re-emphasized low prices throughout its stores after it strayed by slashing prices on certain merchandise. It also brought back thousands of items that it culled during an overzealous campaign to de-clutter its stores.

But a bribery scandal threatens to slow its business overseas. Wal-Mart has already slowed its expansion plans in Mexico, and last November, the retailer said in an SEC filing that it was looking into potential U.S. bribery law violations in Brazil, China and India. The New York Times first reported the allegations in April 2012 that Wal-Mart failed to notify law enforcement that company officials authorized millions of dollars in bribes in Mexico to speed up getting building permits and gain other favors.

The New York Times articles have reported that Wal-Mart officials including Duke were allegedly informed starting in 2005 about bribes being made in the country.

Wal-Mart has been strengthening its compliance controls in the wake of the bribery allegations. According to new changes in its executive compensation plan, Wal-Mart said that the audit committee can reduce or eliminate executives' annual cash incentives if Wal-Mart doesn't meet certain compliance goals. It said that the company's senior leadership will evaluate key policies and controls and prepare a timetable for implementing more changes in its compliance program.

The Associated Press formula calculates an executive's total compensation during the last fiscal year by adding salary, bonuses, perks, above-market interest that the company pays on deferred compensation and the estimated value of stock and stock options awarded during the year. The AP formula does not count changes in the present value of pension benefits. That makes the AP total slightly different in most cases from the total reported by companies to the Securities and Exchange Commission.

The value that a company assigned to an executive's stock and option awards was the present value of what the company expected the awards to be worth to the executive over time. Companies use one of several formulas to calculate that value. However, the number is just an estimate, and what an executive ultimately receives will depend on the performance of the company's stock in the years after the awards are granted. Most stock compensation programs require an executive to wait a specified amount of time to receive shares or exercise options.

[Associated Press; By ANNE D'INNOCENZIO]

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