A $18.7 Million Payday for Walmart's CEO

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WalmartMichael Duke, the CEO of the world's biggest retailer and the largest company on the Fortune 500, made $18.7 million last year according to its latest proxy report. The compensation was little changed from the $19.2 million Duke made in Walmart's (WMT) 2009 fiscal year. Of his 2010 pay package, $12.7 was in stock awards.

Is the compensation fair? Investors may have mixed views. In the fiscal that ended on January 31 of this year, Walmart's revenue rose 3.4% to $420 million. Net income was up 6.3% for the period to $15.4 billion. But, sales at the firm's flagship U.S. operation were flat at $260.3 million and same store growth did not improve at all. In other words, Walmart may have posted good sales overseas, but it has barely held its own in American against rivals like Target (TGT) and Costco (COST) here in the states.

Shareholders Take a Hit


Walmart's trouble in the U.S. has hurt shareholders badly. The big retailer's shares are up only 10% over the last two years, while the DJIA is higher by nearly 60%. Target's and Costco's stocks have also each risen sharply over the same time period.

The retail behemoth has acknowledged its U.S. trouble, although indirectly. Earlier this month, Walmart said it was recommitting to "Low prices, every day" which has been its hallmark for years. In an announcement the company stated, "Walmart is putting the customer at the center of everything and taking specific steps to deliver one-stop shopping to its customers."

The question Walmart's board has to ask is whether it was reasonable to make the award to Duke when he has taken so long to turn around U.S. operations. The idea that Walmart has recommitted itself to the customer is troubling. Why hasn't that been the case all along?

Duke certainly has to be judged on the performance of Walmart's largest division where his performance has been lacking. And $18.7 million is a lot of green to pay for mediocre results.

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