Wal-Mart’s board of directors has outlined the pay structure for the two highest ranking CEOs recently promoted from within the company ranks. The contract details were spelled out in filings with the Securities and Exchange Commission on Wednesday (Jan. 29).
CEO Doug McMillon will take the retailer’s reins on Feb. 1 earning a base salary of $1.2 million per year, subject to an annual adjustment. McMillon will also continue to be eligible for an annual cash incentive under the company's management incentive plan, based on performance criteria.
For fiscal 2015, McMillon’s target cash incentive payment under the plan will be 320% of his base salary, with a maximum possible payout of 400% of his base salary.
Equity based compensation of 48,710 shares of restricted stock will be awarded annually, vesting in three years. This perk is valued at roughly $3.6 million at the present share price of $74. Also on Jan. 24, McMillon received two additional stock awards in connection with the promotion. The first valued at $4.5 million will vest on Jan. 31, 2015. The second award vesting on Jan. 31, 2016 has an approximately value of $5.2 million around the $74 share price. Each of these stock compensation awards are contingent on performance goals being achieved.
Last year CEO Mike Duke, set to retire Feb. 1, earned a total compensation of $20.69 million, including $13.6 million in stock awards, $4.37 million in bonus incentives and a base salary of $1.315 million.
As CEO of Walmart’s International division, McMillon earned total compensation of $9.56 million last year, including a base salary of $929,748, bonus pay of $1.55 million and stock awards of $6.5 million.
David Cheesewright will take over the control of Walmart’s International division on Feb. 1 earning a base salary of $1.150 million, subject to annual adjustments, to be paid in Canadian dollars.
Cheesewright will continue to reside in Canada, but also maintain a home in Bentonville, according to company sources. He received a one-time $2 million payment related to his transition back to the United States and the elimination of certain allowances and tax equalization associated with his prior expatriate positions. He is also eligible to receive an annual cash incentive based on performance goals achievement. His target cash incentive payment under the plan will be 240% of his base salary, with a maximum possible payout of 300% of his base salary.
Equity-based compensation of approximately $1.5 million in restricted shares will also be earned. These shares vest in three years.
Cheesewright is set to receive an annual equity award valued at $4.5 million ($74) per share over the next three year period, pending certain criteria are met.
Addition stock awards given in connection this promotion involved 38,634 shares that will vest on Jan. 31, 2015 and 43,808 shares that vest on Jan. 31, 2016. These two stock awards have present-day values of $2.85 million and $3.24 million, respectively.