Wal-Mart Brass Bags Big Bucks

Fifteen public companies in Benton, Washington, Sebastian and Boone counties shelled out $52.5 million last year to compensate 65 public company executives.

The top five Wal-Mart Stores Inc. executives — President and CEO Lee Scott; Chairman of the Board David Glass; and Executive Vice Presidents Thomas Coughlin, John Menzer and Thomas Grimm — earned the king’s share of the wealth, with a collective $22.7 million. Together, the men earned 43.3 percent of the total compensation for public-company executives in Northwest Arkansas.

For the Northwest Arkansas Business Journal list, each executive’s total compensation included salary or cash, exercised stock options, profit-sharing plans, bonuses, performance-based pay and other benefits, such as 401(k) and retirement contributions. Companies must detail each executive’s compensation plan in their annual reports, which are filed with the U.S. Securities and Exchange Department.

Considering only salaries and cash compensation, the Wal-Mart team earned $4.3 million, or 21.2 percent of the salaries paid to all of the listed executives.

Bonuses and performance-based pay make the most substantial difference between the salary and the total compensation figures.

Scott’s total compensation topped $8.9 million, but his base salary for 2000 tallied less than $1 million. IRS Code 162 prohibits companies from deducting nonperformance-based pay that exceeds $1 million. So, Scott and other CEO’s defer part of their base salaries to stay under the $1 million mark and allow their companies stronger tax deductions.

According to Wal-Mart’s 2001 proxy, Scott’s deferred compensation will be returned to him, with accrued interest, when he retires.

Tyson Foods Inc. executives — Chairman, President and CEO John Tyson, Senior Chairman Don Tyson, Chief Operating Officer Greg Lee, President William Lovette and Executive Vice President John Lea — ranked second for collective salary pay with $2.7 million, or 13.5 percent of the total $20.2 million of salaries paid.

Tyson’s officers took fourth place for total compensation with $4.7 million and 13.5 percent of the total paid.

Arkansas Best Corp. in Fort Smith took the No. 2 ranking for total compensation with $6.4 million, or 12.2 percent of the total paid. Those officers include president and CEO Robert Young III, President and CEO David Stubblefield, Senior Vice President Jerry Yarbrough, Executive Vice President Lary Scott and Vice President David Loeffler.

Apples to Apples

Although Scott’s total compensation eclipsed the other public-company leaders in Northwest Arkansas, his wallet is thin when compared with others in his national peer group.

According to Fortune.com, 52-year-old Scott was compensated with $16.7 million in 2000. Fortune figured Scott’s total compensation differently than the Journal by including an estimate of the present value of options grants.

However, the president and CEO of the world’s largest retailer ranked low in Fortune’s total compensation listing of industry leaders. For 2000 Scott’s total compensation was only higher than three of the 13 industries examined by Fortune.

Raymond Gilmartin, CEO of Merck, received $11.7 million; Richard Wagoner, CEO of General Motors, accepted $10.1 million; and Microsoft CEO Steven Ballmer earned an estimated $633,514.

The three highest-compensated executives in the United States made 5-8 times Scott’s total compensation. Citigroup CEO Sanford Weill raked in $150.7 million, General Electric CEO John Welch earned $125.3 million and Coca-Cola CEO Douglas Daft received $109.4 million, according to Fortune’s reports.

Scott’s gross revenue is still formidable in his field, though. His $16.7 million soared 793 percent higher than 1990’s highest-paid retail executive, Sears Roebuck CEO Edward Brennan, according to Fortune. Ten years ago, Brennan took the top slot with total compensation of $1.87 million.

Companies Dig Deep

When it comes to attracting and retaining key executives, some companies give until it hurts, and others don’t stop there.

Last year, Wal-Mart netted $6.3 billion. Scott’s salary and bonus equaled less than one-tenth of that.

Arkansas Best paid Young 2.1 percent of its 2000 net income. Cannon Express paid 86.5 percent of its net income to President and Chairman Dean Cannon.

Of the companies that made money last year, USA Truck Inc. paid the highest percentage of its net income to an executive. President and CEO Robert Powell took home $164,352 in salary and bonuses, 174.8 percent of the company’s $94,000 net income.

Beverly Enterprises Inc. in Fort Smith paid Chairman David Banks $935,000 for salary and bonuses, but the company lost $54.5 million last year.

Only Stephen Brooks, co-CEO of Advanced Environmental Recycling Technologies Inc. in Springdale, took no compensation when his company lost $2.2 million last year.

Arkansas benefited from the executives’ pay, even if some of the companies did not.

According to a tax formula provided by Fayetteville certified public accountant Don Meyer, state income tax from the 65 officers totaled about $2.4 million.

That figure only accounts for the executives’ salaries and bonuses, as complete stock-option information was unavailable.

Wal-Mart executives combined to contribute about $1 million, or 57.9 percent of the total taxes collected from the public-company list.

However, Meyer said city sales taxes, such as those on food and lodging, could take another 15-20 percent more of an executive’s annual income, depending on the officer’s lifestyle.