Annual Meeting: June 5, 2019

Walmart CEO Douglas McMillan’s total compensation increased from $22.7 million in 2017 to $23.6 million in 2018. According to proxy disclosure the total compensation of Walmart’s median associate was $21,952, and the ratio of these amounts was 1,076:1. Last year the median associate’s compensation was $19,177, and the ratio of these amounts was 1,188:1. By way of contrast, the median pay at Costco under the same calculation was $38,810, and the pay ratio was 191:1. In its 2019 Environmental, Social and Governance Report, Walmart notes that the average hourly wage for a full-time associate is $14.26, which I believe is still well below what would be considered a livable wage in most communities. Presumably the hourly wage of a part-time associate is even lower.

For 2018, McMillan was paid NEIC (non-equity incentive compensation) -- essentially a cash bonus -- of over $5 million. Throughout its proxy statement the company makes much of the fact that its compensation is tied to company performance, but there are real concerns about how that “performance” is calculated.

Walmart appeared in a recent analysis by MarketWatch’s Francine McKenna, “Here’s one way to tell if a company is overpaying its CEO” about companies that award bonuses on the basis of non-GAAP figures. MarketWatch, using data provided by Audit Analytics, looked at “public companies’ recent use of metrics that adjust GAAP net income in earnings announcements and when calculating executive bonuses” that “used non-GAAP metrics to convert net losses to income and to meet executive bonus targets.” According to the analysis, Walmart’s GAAP earnings were $20,437 million. The non-GAAP earnings release figure was $20,504 million. For compensation purposes the company further adjusted the numbers in order to bring the earnings figure up to $23,291 million, which then exceeded the compensation target.

Last year 9.2% of shareholders voted against CEO pay at Walmart. I expect the number will be higher tomorrow.