Wal-Mart?s Scott Solidly Compensated

Lee Scott, president and CEO of Wal-Mart Stores Inc., received about $2.7 million in salary and bonus last year, a 36 percent increase over the amount he received the year before becoming head of the world’s largest retailer. In addition, Scott received $96,168 in “other compensation.”

The numbers were released April 17 in Wal-Mart’s proxy filing with the Securities and Exchange Commission.

Scott, 51, who was appointed president and CEO in January 2000, earned a salary of $992,308 and a bonus of $1.75 million in the fiscal year ended Jan. 31, 2001, which Wal-Mart refers to as “fiscal 2001.” His base salary will be $1.1 million in fiscal 2002.

Scott also received restricted stock valued at $6.08 million and options to buy 459,284 shares at $50.70 per share (the stock price on March 8), which the company estimated at a potential value of $8.2 million. Wal-Mart’s stock option plan allows a price to be locked in for a period of 10 years.

Scott elected to defer until retirement any annual compensation exceeding $1 million for fiscal 2001 and the current fiscal year.

Scott, who was the company’s chief operating officer, replaced David Glass, who holds a full-time position on the company’s board of directors executive committee and received $2.9 million in pay and bonus in fiscal 2001.

In fiscal 2000, Scott received about $2 million in salary and bonus as chief operating officer of Wal-Mart. He received no stock awards last year but was given options to purchase 219,931 shares of stock.

Scott became chief operating officer and vice chairman of Wal-Mart in 1999 after working for 16 years in the company’s logistics operations and three years in merchandising.

He helped Wal-Mart build its hub-and-spoke distribution network, making sure all Wal-Mart stores are within a day’s drive of a distribution center.

Wal-Mart’s logistics and distribution system is considered the best in the retail world, and Scott’s rise to CEO signals the importance of logistics and technology in Wal-Mart’s success.

n Wal-Mart Stores Inc. had no plan to open 50 new stores in Germany by the end of 2002 as reported by newspapers around the world, said Jose Gomez, a spokesman for the international division of the world’s largest retailer.

Gomez said Allan Leighton, the former head of Wal-Mart’s European operations, casually mentioned a year ago that he would like to see that many new stores open in Germany by that date, but the company never initiated such a plan of expansion.

“It was a general passing statement” that Leighton made to a German newspaper, Gomez said.

Wal-Mart plans to open two stores in Germany this year. Further plans are unavailable at this time.

A spokeswoman for Wal-Mart said news reports that originated with The Wall Street Journal about the company “scrapping” expansion plans in Germany were “inaccurate.”

Instead, Wal-Mart is concentrating on renovating existing stores in Germany, said Maria Rodriguez, a company spokeswoman.

Wal-Mart first entered the German market in 1997 with the purchase of the 21-store Wertkauf hypermarket chain. Wal-Mart now has 94 stores in Germany. The discount giant renovated 24 stores in that country last year.

Analysts believe Wal-Mart is losing about $200 million per year in Germany, the only country where the Bentonville-based company has not gained a firm foothold.

Wal-Mart said Leighton’s original plans were too optimistic and that competitors have taken up its strategy of bargain-basement prices, encouraging loyal consumers to stick to old favorites.