This year, the Waltons will pay themselves 1/3 of Walmart’s $9.9 billion annual profit from FY 2018, approximately $3.2 billion in dividend payments.
$3.2 billion split among Walmart’s 1.1 million hourly workers could mean a $2,900 bonus for every hourly worker.
Based on the majority shares they control, the Waltons could host Walmart’s shareholder meeting around their kitchen table.
Walmart’s Top Executives
Walmart’s top 5 executives have compensated themselves $64.5 million in FY 2018. Walmart has spent almost $400 million on executive compensation over the last 3 years.
During this year’s annual meeting, shareholders will approve Doug McMillon’s $22.8 million compensation package.
Why McMillon’s Pay is Wrong: Morally and Metrically
A significant portion of McMillon’s pay is based on performance bonuses, which is calculated using pre-determined metrics and targets clearly spelled out in the company’s proxy statement. However, Walmart has been deteriorating the metrics upon which performance pay is based by 1) lowering performance targets and 2) adjusting the return on investment (ROI) so the threshold for executive bonus pay could still be achieved despite lowered performance. This means that even if the company is not performing as well as it should, McMillon still achieves maximum pay out.
Additionally, given that Walmart has underperformed the S&P 500 over the past 1-, 3-, 5-, and 10-year periods, investors should be concerned if executive bonuses overly emphasize short-term metrics, which could be achieved at the expense of longer term performance. *
Walmart’s Workforce: The 99
Out of Walmart’s 1.5 million workers, approx. 1.1 million are hourly. Nearly half of its hourly workers are part-time, approx. 500,000.
The annual salary for a full-time hourly worker is $24,394.51.
Walmart denies many basic middle-class benefits to its part-time workers, like employer-provided health care, paid maternity or parental leave, and holiday pay.
With thousands of workers qualifying for government assistance due to Walmart’s low wages and inconsistent scheduling, U.S. taxpayers are left on the hook to cover the approximate $6.2 billion in government subsidies Walmart workers are forced to rely on.
Walmart raised its starting wage to $11 an hour this year, but fails to recognize or fairly compensate the many workers who have been with Walmart for 6, 7, 9 years and still make $11 an hour.
Walmart’s stagnant, low wages contribute to chronic poverty in the U.S.
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* Consistent with that approach the company disclosed that beginning last year the compensation committee of WMT’s board had reduced the potential short-term cash award payouts and reallocated those opportunities to long term targets. Investors were likely dismayed at the results of a Bloomberg investigation which found that, despite the reported change in policy, the reduction wasn’t actually implemented.
“A transition component for the program was inadvertently not reflected in the 2017 proxy statement, however we do not believe this was material to the overall description of our executive compensation program,” said a WMT spokesperson.