CEO compensation for 2013, 2014 also linked to progress on compliance, according to proxy statement
Retail giant Walmart, which is investigating allegations that company executives paid bribes to boost expansion in Mexico, aims to link executive compensation to compliance for the fiscal year 2014, according to the company’s proxy statement ahead of the June 7 annual shareholders’ meeting.
‘Our executive incentive compensation programs continue to be based on the financial measures of sales, operating income and return on investment, which are aligned with our priorities of growth, leverage and returns,’ Walmart writes in the proxy. ‘In addition to these financial measures, for fiscal 2014 our executive compensation program will also have a compliance component.’
Annual bonuses for named executive officers and ‘certain’ other executive officers will be linked to meeting compliance objectives, which will be determined in part by evaluations by company leadership of key processes and controls, the company says. If Walmart’s audit committee judges that ‘adequate progress’ toward meeting compliance objectives hasn’t been made, it ‘may reduce or eliminate fiscal 2014 annual cash incentive compensation for the relevant executive officers.’
Michael Duke, CEO, also says he will accept an additional compliance component to his fiscal 2013 cash incentive payment, meaning he may have to give back a portion of his 2013 compensation, on top of any penalty for 2014, at the end of the 2014 fiscal year.
Senior management will be tasked with preparing quarterly reports covering progress on compliance policies. Walmart leadership will also prepare a timetable for ‘further enhancements’ to its compliance programming, including training, monitoring, standards and controls, leadership and more.
In 2011, following a report in the New York Times, Walmart announced it had started investigating allegations that company officials paid bribes to help speed up the opening of new stores in Mexico, as well as other allegations regarding bribes paid in China, Brazil and India. The company says in its proxy that it spent $157 mn last year on the investigations. The US Department of Justice and the SEC are also investigating the allegations.
‘Our company has made significant improvements to our compliance programs around the world and has taken a number of specific, concrete actions with respect to our processes, procedures and people,’ Walmart’s proxy states. ‘These steps include aligning our global compliance, ethics, investigations and legal functions under one organization; creating new senior global compliance and investigations positions and hiring seasoned professionals to fill these positions; and implementing enhancements to how we report and investigate allegations of wrongdoing worldwide.’
