Executive pay is a significant factor in human resource management. It is important to
properly compensate executives because it motivates them to act in the interest of shareholders.
Remuneration for the top most executives differs from compensation for other workers in
Walmart and other organizations. Executive pay covers senior individuals that include Vice
Presidents, Chief Financial Officer, Chief Executive Officer, Chief Technology Officer, and
other senior managers. Typically, executive pay is influenced by two objectives. First, tying
organizational performance over a certain period to the pay offered to executive. Second,
ensuring that pay packages offered to executives remain competitive with those provided by
competitors to their senior managers. Therefore, the attractive compensation packages offered to
senior executives at Walmart play a major role in enhancing the motivation and dedication of the
management team to increase the organization’s success.
The basis of Walmart's executive compensation plan is that senior executive ought to be
rewarded when shareholder value and company's profitability grow over a certain period. Due to
the fact that senior managers are usually in high tax brackets, the company prefers providing
their compensation in a manner that offers significant savings in tax. For that reason, the total
compensation packages of these individuals may be more significant than the salary. Particularly
when the base pay exceeds 1 million dollars, executives are often more concerned about
components of the total package, including deferred and current remuneration. Thereby, Walmart
ensures that its leaders are sufficiently compensation as a way of keeping them motivated to
drive business growth and create shareholder value.
Executive compensation for senior managers and typical pay packages offered to other
workers are different in that the former is based on the organization’s performance. Therefore, if
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a corporation underperforms, its senior managers receive only a tiny part of their potential
remuneration. However, if the enterprise attains its annual targets and its share price increases
over the long term, the executives are likely to receive a large payout. Senior executives in a
company like Walmart are offered pay packages that consist of components such as base salary,
contingent payments, executive perquisites, benefits, long-term incentives based on performance,
and performance-based annual bonuses. The Structure of executive pay is meant to reward
impressive business performance and align the executive compensation with creation of
shareholder value. Hence, if senior executives and Walmart perform well, the individuals tend to
get much higher pay due to superior company results.
Forms of Executive Compensation
The forms of executive pay offered to executives at Walmart include cash compensation, option
grants, deferred compensation, long-term incentive plans, retirement packages, and executive
perks. Table 1 provides an overview of executive compensation at Walmart for the 2020 fiscal
year and Table 2 shows the compensation for the members of Walmart's board of directors for
2020 fiscal year.
Executive perks: The various compensation packages offered to top managers at Walmart
include travel reimbursements and tickets for private jets. The perks offered to executives
are subjected to scrutiny to prevent abuse. The perquisites are vital in tying talented
managers to the enterprise and in demonstrating that the company values them. The non-
cash items allow executives to be viewed as VIPs within and outside the corporation.
Moreover, the perks offer significant tax savings since the internal revenue service does
not tax them as income.
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Retirement packages: These are compensation packages available to senior managers
who retire from Walmart. Typically, these packages may include health benefits and as
well as pension.
Long-term incentive plans: These packages encompass compensation based on
performance. The current tax laws in the United States favor compensation-for-
performance pay. Performance-based incentives are formulated to tie executive pay to the
sustainable success of the business. This compensation should result in growth-oriented
decisions that are needed for the enterprise to do well over the long term.
Bonus plans: Since it may not be easy to determine the performance of executives, bonus
pay should be based on a meaningful performance measure. For instance, Walmart ties
yearly bonuses for senior managers to the organization’s profitability. The bonuses can
be as high as 35 percent of an individual’s base salary. Bonuses offered to senior
executives may be determined in various ways. One of these is a system whereby the
assessment of the board of directors and the Chief Executive Officer becomes the basis
for awarding bonuses. However, this approach may be hindered by absence of
measurable, formal targets. In addition, bonuses maybe linked to net profit before tax,
earnings per share, return on investment, and other specific measures. Other complex
systems may be used to compute bonuses. Importantly, it is vital to clarify the method
used to determine bonuses so that executives understand what they are expected to
accomplish to receive the bonuses.
Deferred compensation: This is the type of pay that is deferred until a future date. This
postponement is usually done for tax purposes.
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Option grants: A stock option provides an executive with the right to purchase stock in
the organization at a discounted price. Stock options are typically used as performance-
based incentives. When utilized appropriately stock options are effective in inspiring the
organization's management to act in the interest of shareholders and increase shareholder
value.
Cash compensation: This includes all monetary pay offered to an executive. The
organization usually lists the base salary for key individuals in the management team,
including the Chief Executive Officer, Executive Vice Presidents, and Chief Financial
Officer. The salaries of executives at Walmart vary by job position. On average, the base
pay makes up approximately 40-60 percent of the yearly total compensation for the top
executive. To increase the salary of executives, the approval of the board of directors may
be required.
Title Name of
Executive
Equity Total Cash Other Total
Executive
Compensation
Global Chief
Technology Officer
Kumar Suresh USD 43,603,400 USD
2,273,700
USD 21,600 USD
45,898,700
Executive Vice
President
McLay Kathryn USD 11,887,200 USD
1,601,200
USD 17,900 USD
13,506,200
Executive Vice
President
McKenna
Judith
USD 7,323,600 USD
2,909,900
USD
290,800
USD
10,524,200
Executive Vice
President
Furner John USD 6,712,600 USD
2,703,100
USD
325,900
USD 9,741,600
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Executive Vice
President and CFO
Biggs Brett USD 5,752,900 USD
2,491,100
USD
262,400
USD 8,506,400
President and CEO McMillon
Douglas
USD 15,710,000 USD
4,793,700
USD
410,100
USD
20,913,800
Table 1: Executive compensation at Walmart for the 2020 fiscal year (Walmart, 2020).
Name Total Compensation
Flynn Timothy USD 300,600
Horton Thomas USD 333,100
Reinemund Steven USD 302,200
Walton Steuart USD 295,100
Easterbrook Stephen USD 259,500
Friar Sarah USD 293,000
Walton Robson USD 275,000
Mayer Marissa USD 274,900
Penner Gregory USD 500,000
Conde Cesar USD 317,900
Harris Carla USD 275,900
Table 2: Compensation for the members of Walmart's board of directors for 2020 fiscal year
(Walmart, 2020)
Analysis of Walmart’s Executive Compensation
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In a 2019 proxy filing with the Securities and Exchange Commission (SEC), Walmart
indicated that the compensation for its senior executives exceeded USD 112.39 million. The
most highly paid executive officer was Kumar Suresh who holds the position of Global Chief
Technology Officer at the organization. Because the company’s annual performance was
impressive, the top executive officers received large pay packages. The corporation's revenue
increased to 524 billion US dollars which was a 1.85 percent growth from 2018. However, the
company recorded a lower operating income at 20.57 billion US dollars. Due to the decreased
income, the top executives received a lower bonus than that they had been awarded in 2018
(Souza, 2020; U.S. Securities and Exchange Commission, 2019; Walmart, 2020).
The total income for Kumar Suresh was 45.9 million US dollars, which included stock
awards valued at 43.6 million US dollars as an item of deferred compensation as well as a
515,100 US dollars signing bonus. The executive got a USD 576,900 base salary, US$1.81
million in cash incentives, and other compensation valued at US$21,600. His stock awards and
sign-on bonus are what made him among the top six highest paid executives in the firm (Souza,
2020; U.S. Securities and Exchange Commission, 2019; Walmart, 2020).
The total compensation for McMillon Doug, Chief Executive Officer, was 22.100 million
US dollars and an additional 135,000 US dollars in deferred salary. Since 2017, the CEO has
constantly received 1.18 million US dollars as base salary. In 2019, he got 15.71 million US
Dollars in stock awards, just as he had received since 2017. His total bonus pay for the 2020
fiscal year was 3.57 billion US dollars, which was a decrease from the bonus he had got in 2019
and 2018. The basis of pay incentive is total organization performance of operating income and
sales revenue growth. Though the company recorded a revenue increase in 2020, its operating
income was less than for 2019 (Horowitz, 2018; Meyersohn, 2019). Due to decreased incentive
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pay, the CEO’s total compensation in 2020 reduced by approximately 5 percent from that he got
in 2019 (Souza, 2020; U.S. Securities and Exchange Commission, 2019; Walmart, 2020).
The total compensation for Biggs Brett, the Chief Financial Officer, was 9.5 million US
dollars. USD 675,000 of his pay was deferred. Biggs’ base salary increased by 2.5 percent to
USD 915,400 from the amount he got in 2019. Just like in 2019, he received 5.8 million US
dollars in total stock awards. The CFO got $1.6 million US dollars as bonus incentive pay which
was a decrease from the 2.223 million US dollars he earned in 2019. He got USD 292,100 as
pension deferred compensation which was slightly less than he received in 2019. Just like in
2019, he earned an additional USD 262,400 as other compensation (Souza, 2020; U.S. Securities
and Exchange Commission, 2019; Walmart, 2020).
The total compensation for McKenna Judith, Executive Vice President, in the 2020 fiscal
year was 12.21 million US dollars. This pay was slightly less than the 12.900 million US dollars
she got in 2019 with the same responsibilities. She earned a 1.07 million US dollars base salary,
a slight increase from the 1.04 million US dollars she received in 2019. Her stock awards and
bonus pay were lower than in 2019. Her bonus performance pay was 1.8 million US dollars and
stock awards were valued at 7.3 million US dollars. Moreover, she earned a 1.7 million US
dollars in pension deferred compensation and USD 290,800 as other pay (Souza, 2020; U.S.
Securities and Exchange Commission, 2019; Walmart, 2020).
McLay Kathryn, Executive Vice President, got her current position in November 2019.
Prior to that, she was in charge of Walmart's Neighborhood Markets. Her total compensation for
the 2020 fiscal year was 13.51 million US dollars. She earned a USD 640,400 base pay, a USD
960,900 performance bonus, and 7.3 million US dollars in stock awards. Furthermore, she got
USD 2,480 as pro-rated pension deferred payment and USD 17,900 as other compensation. Her
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deferred salary was USD 12,500 (Souza, 2020; U.S. Securities and Exchange Commission,
2019; Walmart, 2020).
The total compensation of Furner John, Executive Vice President, was 9.92 million US
dollars, which included USD 40,500 as deferred payment. In October 2019, Furner got the
position of CEO of Walmart U.S. The USD 847,900 salary earned by Furner included his former
responsibilities as Chief Executive Officer of Sam's Club. He got USD 133,250 as pension
income which was a USD 40,450 increase from what he received in 2019. Just like in 2019, he
got USD 325,900 as additional income (Souza, 2020; U.S. Securities and Exchange
Commission, 2019; Walmart, 2020).
How to Find Executive Pay
Information about executive compensation at Walmart can be found in the documents
filed by the organization with the Securities and Exchange Commission. The company usually
discloses the amount it pays members of its senior management team, how the compensation is
determined, and who is involved in determining that amount. Some of the documents where the
information is disclosed include S-1/S-3 Forms, Form 10-Q, Form 10-K,and Form 8-K. Current
issues of S-1/S-3 Forms contain data about pay offered to senior members of the management
team. This information is usually useful to future investors. Form 10-Q contains quarterly data
about executive pay. Form 10-K contains annual information about executive pay. Current
filings of Form 8-K reveal compensation information when there are changes in pay procedures
and policies. Hence, there are various ways that may be used to get information about an
organization’s executive pay.
Conclusion
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Remuneration packages offered to the top most executives at Walmart differ from
employee compensation both in benefits and scale. Stock options and a large base salary are an
integral part of executive pay packages. However, an organization may decide to offer a low
base pay and more advantageous stock options to minimize the tax burden. The issue of
executive remuneration can be controversial considering that recently, packages offered to senior
managers have significantly increased compared to compensation for average employees.
Internally, when junior workers in an organization feel that incentives offered to be their
managers far exceed the executive’s work input, employee productivity, loyalty, and dedication
are likely to decrease. Externally, if a business is perceived to be unfair to workers, damaging to
the environment, and making losses, the compensation packages offered to executives often
become the focus of media attention and criticism. Thereby, it is important to ensure that
Walmart’s executive compensation is consistently based on long-term growth and profitability of
the business.
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References
Horowitz, J. (2018, April 23). Walmart's CEO earns 1,188 times as much as the company's
median worker. CNN Business.
https://money.cnn.com/2018/04/23/news/companies/walmart-ceo-pay/index.html
Meyersohn, N. (2019, April 24). Walmart CEO Doug McMillon's total pay was nearly $24
million last year. CNN Business.
https://edition.cnn.com/2019/04/23/business/walmart-ceo-doug-mcmillon-pay-
retail/index.html
Souza, K. (2020,April 24). Top six Walmart execs compensation a combined $112.39 million in
2019. TBP. https://talkbusiness.net/2020/04/top-six-walmart-execs-compensation-a-
combined-112-39-million-in-2019/
U.S. Securities and Exchange Commission. (2019, June 5). Walmart: Notice of 2019 annual
shareholders' meeting.
https://www.sec.gov/Archives/edgar/data/104169/000120677419001406/wmt3482341
-def14a.htm
U.S. Securities and Exchange Commission. (2019, October 10). Form 8-K Walmart Inc.
https://sec.report/Document/0000104169-19-000070/
Walmart. (2020, June 3). Walmart: Notice of 2020 annual shareholders' meeting.
https://corporate.walmart.com/media-library/document/2020-walmart-proxy-
statement/_proxyDocument?id=00000171-a3e6-de83-a7fd-f7eeef900000