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Although the stock price of Wal-Mart Stores (NYSE: WMT) has floundered for years with little deviation from the $50 area, the retailer's CEO has been bagging some large paychecks even as WMT shareholders have received bupkus from their investments. It's true that investors should be looking for longer-term returns instead of three-month returns, but it's been half a decade since WMT has moved in a significant way.
Would Sam Walton be proud of the performance of the current CEO, Lee Scott? This question was postulated over at Forbes.com, and it makes a pretty good point. With returns of -3.4% annually since Scott has been at the helm, does that kind of performance merit a $60 million payout for Scott since he's been at the helm? That's $8 million a year.
All the PR hogwash from boards that overpay under-performing leaders based on "competitive market rates" is laughable. Shouldn't a CEO's performance be relative to the performance of the company being led? After all, if you base pay on industry metrics, who's to say that those being looked at for a baseline are performing at the top of their game? Nothing says that -- and it's all relative. The shareholders who have a stake in under-performance should demand that executive pay be tied to that, not meaningless competitive metrics in the CEO world where the comparison could be on another leader's shining performance. Hey, you and I don't get paid that way. Why should CEOs?
Wal-Mart CEO the only one getting rich from the retailer?
Posted May 7th 2007 12:50PM by Brian White
Filed under: Management, Wal-Mart (WMT)
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Reader Comments (Page 1 of 1)
5-07-2007 @ 3:29PM
t harrell said...
NO, I do not think Lee Scott should be getting paid big dividends.
The Wal-Mart employee is one who is very hard working, for the most part. It seems the harder you work for the company the less you are appreciated.
The employees should be getting a better deal with the stock and with the 401K plans.
Why should the CEO and others who aren't peons get paid large dividends or make huge salaries?
Why can't the profit be divided up more equally among them and the employees?
5-07-2007 @ 6:19PM
William Martin said...
Brian,
My feelings exactly about Lee. Maybe WMT will make a change before its to late. As I always say; when W Buffet sells I will. I've been a shareholder since 1981 and have done very well until the 90's. I still call it my "core " holding for now. I will let you know. As always keep up the good work. Billy
5-08-2007 @ 10:52PM
Debbie said...
If he gets to keep making the big bucks then WALMART shouldnt have put a pay cap on us long timers. We work hard and have to put up with the bad irritable customers. But we have no way to make the big bucks.So they want us to go into management but if your manager doesnt like you you dont have a chance. So stop the pay caps,or Lee share the wealth with your associates???????
5-25-2007 @ 9:30PM
Mary said...
I agree with the others. I have been a shareholder since 1983 and have done well. The last six years has been bad. I don't blame it all on Lee Scott but I don't think he should be making that kind of money if the stock is'nt going up. It is'nt fair to the workers or shareholders. There are also others that are overpaid. It is time for a change.