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Retail Execs Prosper

James Mammarella -- Home Textiles Today, October 29, 2007

New York —The leading retailers of home textiles had a fairly respectable year in 2006 — while the top retail executives had a marvelous time indeed.

In 2005, 35 of the retailer executives in the HTT Executive Compensation Report took home cash and stock options exercised equivalent to $1 million or more. In 2006, there were 49 execs who took home $1 million or more.

In the thin-air range, 11 retailer execs took home $5 million or more in 2005, while in 2006 there were 19 who reached that pinnacle.

Of course, it wasn't all upside. Target chairman and ceo Bob Ulrich took home just $33.87 million — not measly, but rather modest compared to his $42.97 million payday for the year prior.

And while the 2005 second-place payday went to a Sears Holdings exec — vice chairman Alan Lacey, with $23.22 million — he has since departed, dropping Sears to the middling ranks of the 2006 payscale table, with president and ceo Aylwin Lewis taking home $1.90 million in total cash compensation.

There were other changes at the top.

The $10 million club among retailers featured six top executives in both 2005 and 2006, but some of the faces have changed — and a woman exec entered this heady mix, even if it was only for a brief sojourn.

There were three $10 million repeaters: Ulrich, along with Kohl's ceo Lawrence Montgomery and the now-departed Home Depot chairman, president and ceo Robert Nardelli (who left the company on Jan. 2, 2007).

The three new faces: Arlene Meier ($15.77 million total cash compensation), who was coo at Kohl's until her retirement on Sept. 1, 2006; James Sinegal ($13.14 million, including no bonus and his usual $350,000 in salary), president and ceo of Costco; and Jeffrey Brotman ($12.37 million), chairman of Costco.

Some perspective is gained by taking a three-year look.

Aggregate sales for the industry (as gauged by the HTT Top 50 Retailing Giants, which account for 90% of the market) climbed 5.1% to $24.7 billion in 2006, up from $24.2 billion in 2005, which was 2.5% above the $23.6 billion generated at retail in 2004. Thus in the three-year period 2004-2006 sales grew about 4.7%.

Now contrast that 4.7% overall retail company sales increase with the three-year gains of dozens of retail executives whose compensation boomed and zoomed by anywhere from double-digits to such levels as the merely stratospheric 112.9% by Michael Balmuth (Ross Stores vice chairman, president and ceo), to the convincingly orbital 248.1% by Aylwin Lewis (Sears Holdings president and ceo), to the utterly outer-space 535.7% by Mike Ullman (JCPenney chairman and ceo).

Of course, the net income gain over three years was top-of-class impressive at each of these retailers — Ross: 42.2%, Sears: 68.6%, JCPenney: 125.2%.

And the 2006 take-home of those three execs in dollars was not exactly jaw-dropping: Balmuth scored a hearty $7.02 million, Lewis a relatively modest $1.90 million, and Ullman had a seemingly mid-level payday of $4.17 million.

Interestingly, income at Target actually dropped 12.9% over the three-year period (from $3.19 billion for 2004 to $2.79 billion for 2006) — while chairman and ceo Ulrich's income rose 18.5% over that period, and that of his colleague, Target president Gregg Steinhafel, climbed 20.6%.

A similar discrepancy can be found at Pier 1 Imports. There, income has declined by an extremely challenging 476.5% over the three years, while the total cash compensation of former chairman and ceo Marvin Girouard (who retired Feb. 19, 2007) grew by 8.1% during that time frame.

Wal-Mart, the world's biggest retailer, managed to add 9.9% to its income between 2004 and 2006.

Some of Wal-Mart's top managers did somewhat better. For example: Michael Duke, vice chairman of international, more than doubled his take-home pay over the three years, with his 2006 total cash compensation of $4.71 million equal to 119.0% more than his 2004 payday.

RETAILERS 3-YEAR SALARY VS. EARNINGS COMPARISON

Name Company Tot. Comp Change Sales Income
Myron E. Ullman, III JCPenney 535.7% 10.0% 125.2%
Aylwin B. Lewis Sears Holdings 248.1 -4.6 68.6
R. Lawrence Montgomery Kohl's 194.6 32.8 57.6
Kevin B. Mansell Kohl's 193.6 32.8 57.6
Byron L. Bergren Bon-Ton 189.8 156.6 132.5
Arlene Meier Kohl's 149.4 32.8 57.6
Bernard Cammarata TJX 127.9 16.7 21.0
Michael T. Duke Wal-Mart 119.0 21.0 9.9
Michael Balmuth Ross Stores 112.9 31.4 42.2
Carol Meyrowitz TJX 64.3 16.7 21.0
Ken C. Hicks JCPenney 54.2 10.0 125.2
Ross E. Manning Tuesday Morning 53.2 1.5 -41.8
Gary G. Friedman Restoration Hardware 50.7 35.6 90.8
David M. Tehle Dollar General 43.9 19.7 -59.9
R. James Kelly Family Dollar 38.3 21.1 -24.3
Michael J. Hayes Fred's 36.0 22.6 -4.3
Howard R. Levine Family Dollar 35.3 21.1 -24.3
Arthur Stark Bed Bath & Beyond 34.0 28.6 17.7
Alex Dillard Dillard's 29.1 1.4 108.8
Drue Corbusier Dillard's 28.4 1.4 108.8
William Dillard, II Dillard's 28.0 1.4 108.8
Mike Dillard Dillard's 27.6 1.4 108.8
Kathleen R. Guion Dollar General 27.1 19.7 -59.9
Francis S. Blake Home Depot 25.3 24.3 15.2
John B. Menzer Wal-Mart 22.9 21.0 9.9
Arnold S. Barron TJX 22.5 16.7 21.0
John D. Reier Fred's 21.9 22.6 -4.3
John W. Tate Restoration Hardware 21.9 35.6 90.8
Gregg W. Steinhafel Target 20.6 26.7 -12.9
Steven H. Temares Bed Bath & Beyond 19.4 28.6 17.7
Robert J. Ulrich Target 18.5 26.7 -12.9
E. Mitchell Weatherly Pier 1 Imports 12.2 -11.1 -476.5
Marvin J. Girouard Pier 1 Imports 8.1 -11.1 -476.5
Robert L. Nardelli Home Depot 7.5 24.3 15.2
H. Lee Scott, Jr. Wal-Mart 4.1 21.0 9.9
Jay R. Jacobs Pier 1 Imports 3.5 -11.1 -476.5
Warren Eisenberg Bed Bath & Beyond 1.8 28.6 17.7
Leonard Feinstein Bed Bath & Beyond 1.8 28.6 17.7
Jeffrey H. Brot man Costco 1.2 25.1 25.0
Laura J. Alber Williams-Sonoma -2.7 18.8 9.2
Thomas M. Belk, Jr. Belk -4.8 50.6 46.6
Terry J. Lundgren Macy's -10.4 71.0 44.4
Susan D. Kronick Macy's -10.6 71.0 44.4
Wayne P. Garten Hanover Direct -11.9 15.3 -227.3
Marta H. Benson Restoration Hardware -13.1 35.6 90.8
H.W. McKay Belk Belk -13.8 50.6 46.6
John R. Belk Belk -13.8 50.6 46.6
Michael J. Marchetti Tuesday Morning -17.7 1.5 -41.8
Robert A. Niblock Lowe's -17.8 28.7 42.7
Patrick J. Connolly Williams-Sonoma -21.5 18.8 9.2
David A. Perdue Dollar General -32.0 19.7 -59.9
Tim Grumbacher Bon-Ton -33.4 156.6 132.5
Larry D. Stone Lowe's -36.1 28.7 42.7
James D. Sinegal Costco -36.4 25.1 25.0
Kathleen Mason Tuesday Morning -39.6 1.5 -41.8
W. Howard Lester Williams-Sonoma -42.9 18.8 9.2
Michael D. Fisher Stein Mart -45.9 2.9 -2.1
Alan Rosskamm Jo-Ann Stores -64.2 2.1 -104.1


EXECUTIVE COMPENSATION RETAILERS
dollar amounts in thousands

Name, Title Company Total cash, stock options exercised Salary 2006 Bonus 2006 Total cash compensation Value of stock options exercised Total cash comp. 3-yr. % change 2004-2006
1. Retired as of Sept. 1, 2006.
2. On Jan. 2, 2007, the company entered into a separation agreement with Nardelli.
3. Served as acting ceo through the end of fiscal 2007; continues as chairman.
4. Promoted to president and coo effective Dec. 16, 2006.
5. Resigned Oct. 5, 2006; continued employment status through June 30, 2007.
6. Appointed vice chairman in September 2006.
7. Became ceo Jan. 28, 2007; appointed a director in September 2006.
8. Promoted to president in Jan. 2006.
9. Joined company on Aug. 1, 2006.
10. Became chairman and ceo on Feb. 14, 2006.
11. Retired Feb. 19, 2007.
12. Became chairman, president and ceo on July 24, 2006.
13. Appointed coo on May 9, 2006.
14. Resigned July 24, 2006.
15. Federated Department Stores became Macy's Inc. on June 1, 2007.
16. On Feb. 14, 2006, Linens Merger Sub Co. merged with and into Linens 'n Things, a wholly-owned subsidiary of Linens Holding Co.
Robert J. Ulrich, chairman and ceo Target $33,866 $1,660 $6,129 $7,789 $26,078 18.5%
R. Lawrence Montgomery, ceo Kohl's 25,476 1,087 1,925 3,012 22,464 194.6
Arlene Meier 1,former coo Kohl's 15,761 452 1,374 1,826 13,935 149.4
James D. Sinegal, president and ceo Costco 13,137 350 0 350 12,787 -36.4
Jeffrey H. Brotman, chairman Costco 12,368 357 200 557 11,811 1.2
Robert L. Nardelli 2, former chairman, president and ceo Home Depot 10,625 2,332 6,000 8,332 2,293 7.5
Terry J. Lundgren, chairman, president and ceo Macy's 15 8,969 1,383 2,705 4,088 4,880 -10.4
Kevin B. Mansell, president Kohl's 8,246 946 1,675 2,621 5,625 193.6
Bernard Cammarata 3, chairman and acting ceo TJX 8,070 912 0 912 7,159 127.9
Michael Balmuth, vice chairman, president and ceo Ross Stores 7,018 994 1,100 2,094 4,925 112.9
Larry D. Stone 4, president and coo Lowe's 6,701 770 491 1,261 5,439 -36.1
Thomas L. Cole, vice chairman Macy's 15 6,555 883 894 1,778 4,777
Ken C. Hicks, president and chief merchandising officer JCPenney 6,278 791 1,073 1,864 4,413 54.2
Ronald W. Tysoe 5, former vice chairman Macy's 15 6,092 830 802 1,632 4,460
H. Lee Scott, Jr., president and ceo Wal-Mart 5,586 1,300 4,286 5,586 0 4.1
Gregg W. Steinhafel, president Target 5,567 1,130 1,044 2,174 3,393 20.6
Susan D. Kronick, vice chairman Macy's 15 5,387 1,043 1,039 2,082 3,305 -10.6
Donald G. Campbell 6, vice chairman TJX 5,205 741 897 1,638 3,567
John B. Menzer, vice chairman, chief administrative officer Wal-Mart 5,162 1,000 2,436 3,436 1,726 22.9
Michael T. Duke, vice chairman - international Wal-Mart 4,707 900 2,463 3,363 1,344 119.0
W. Howard Lester, chairman and ceo Williams-Sonoma 4,674 975 0 975 3,699 -42.9
Carol Meyrowitz 7, president TJX 4,623 1,077 2,018 3,094 1,528 64.3
Myron E. Ullman, III, chairman and ceo JCPenney 4,174 1,500 2,674 4,174 0 535.7
Alex Dillard, president Dillard's 3,978 680 2,482 3,162 816 29.1
William Dillard, II, ceo Dillard's 3,958 770 2,482 3,252 706 28.0
Robert A. Niblock, chairman and ceo Lowe's 3,579 950 1,038 1,988 1,592 -17.8
Arnold S. Barron, senior evp, group president TJX 3,396 673 729 1,401 1,994 22.5
Laura J. Alber, president Williams-Sonoma 3,054 701 0 701 2,353 -2.7
Steven S. Fishman, chairman, ceo and president Big Lots 2,592 960 1,632 2,592 0
Arthur Stark 8, president and chief merchandising officer Bed Bath & Beyond 2,590 821 0 821 1,769 34.0
Byron L. Bergren, president and ceo The Bon Ton 2,471 971 1,500 2,471 0 189.8
Anthony J. Buccina, vice chairman, president-merchandising The Bon Ton 2,055 689 1,367 16 2,055 0
Frank L. Fernandez, former evp - secretary and general counsel Home Depot 1,951 724 908 1,632 319
Eduardo Castro-Wright, evp, president and ceo - Wal-Mart stores division Wal-Mart 1,948 721 1,227 17 1,948 0
Aylwin B. Lewis, ceo and president Sears Holdings 1,900 1,011 889 1,900 0 248.1
Thomas Kingsbury 9, senior evp Kohl's 1,838 375 1,463 19 1,838 0
Francis S. Blake, chairman and ceo Home Depot 1,700 758 941 1,700 0 25.3
Howard R. Levine, hairman and ceo Family Dollar 1,586 729 858 1,586 0 35.3c
Thomas M. Belk, Jr., chairman and ceo Belk 1,577 817 760 1,577 0 -4.8
Patrick J. Connolly, director and evp - chief marketing office Williams-Sonoma 1,556 567 0 567 989 -21.5
John R. Belk, president and coo Belk 1,251 717 534 1,251 0 -13.8
H.W. McKay Belk, president and chief merchandising officer Belk 1,251 717 534 1,251 0 -13.8
Steven H. Temares, ceo Bed Bath & Beyond 1,231 1,231 0 1,231 0 19.4
Robert J. DiNicola 10, chairman and ceo Linens 'n Things 16 1,190 1,190 0 1,190 0
Leonard Feinstein, co-chairman Bed Bath & Beyond 1,100 1,100 0 1,100 0 1.8
Warren Eisenberg, co-chairman Bed Bath & Beyond 1,100 1,100 0 1,100 0 1.8
Marvin J. Girouard 11, chairman and ceo Pier 1 Imports 1,081 1,081 0 1,081 0 8.1
David A. Perdue, chairman and ceo Dollar General 1,038 1,038 0 1,038 0 -32.0
Tim Grumbacher, executive chairman The Bon Ton 1,037 675 362 1,037 0 -33.4
David B. Zant, vice chairman The Bon Ton 927 519 408 927 0
R. James Kelly, president, coo and cfo Family Dollar 875 466 409 875 0 38.3
Michael D. Fisher, president and ceo Stein Mart 816 816 0 816 0 -45.9
Gary G. Friedman, president, ceo and chairman Restoration Hardware 813 573 240 25 813 0 50.7
Darrell Webb 12, chairman, president and ceo Jo-Ann Stores 808 404 404 808 0
Beryl J. Buley, division president - merchandising, marketing and supply chain Dollar General 762 575 187 762 0
Ken Dunaj 13, coo Restoration Hardware 687 317 370 29 687 0
Kathleen R. Guion, division president - store operatons and store development Dollar General 663 500 163 663 0 27.1
Kathleen Mason, president and ceo Tuesday Morning 633 633 0 633 0 -39.6
Wayne P. Garten, president and ceo Hanover Direct 600 600 0 600 0 -11.9
Alan Rosskamm 14, former chairman, president and ceo Jo-Ann Stores 515 375 0 375 140 -64.2
John D. Reier, president Fred's 305 255 50 305 0 21.9
Michael J. Hayes, chairman and ceo Fred's 299 224 75 299 0 36.0


RETAILER SALARIES
Top and bottom 5 retailers by 2006 salary*

*straight salary, excluding bonus, other cash compensation and stock options
Top Five
Robert L. Nardelli, Home Depot $2,331,538
Robert J. Ulrich, Target 1,659,616
Myron E. Ullman, III, JCPenney 1,500,000
Terry J. Lundgren, Macy's 1,383,333
H. Lee Scott, Jr., Wal-Mart 1,300,000
Bottom Five
Jeffrey H. Brotman, Costco $356,731
James D. Sinegal, Costco 350,000
Ken Dunaj&, Restoration Hardware 316,809
John D. Reier, Fred's 254,808
Michael J. Hayes, Fred's 224,231


RETAILER CASH BONUSES
Top and bottom 5 retailers by 2006 bonus

Top Five
Robert J. Ulrich, Target $6,128,960
Robert L. Nardelli, Home Depot 6,000,000
H. Lee Scott, Jr., Wal-Mart 4,285,840
Terry J. Lundgren, Macy's 2,704,800
Myron E. Ullman, III, JCPenney 2,673,750
Bottom Five
Jeffrey H. Brotman, Costco $200,000
Beryl J. Buley, Dollar General 186,875
Kathleen R. Guion, Dollar General 162,500
Michael J. Hayes, Fred's 75,000
John D. Reier, Fred's 50,000


RETAILER STOCK OPTIONS EXERCISED
Top and bottom 5 retailers by 2006 stock options exercised

However volatile and margin-shaving the retail environment seems today, it is clear that 2006 was a banner year in stock options for the top retail execs. The top five cash-ins of stock options added up to $87 million in 2006, compared to a top-five total of $84 million in 2005. Leave out the options exercised by a single executive — Target's chairman and ceo Bob Ulrich — and the year-to-year total swung up 24% to $61 million from $49 million. (In fact, bringing home $26 million in cashed-in options was a bit of an off-year for Ulrich — after his $35 million exercise in 2005.) The bottom five saw an even more dramatic upswing, totaling $2.97 million in 2006, up from $614,000 in 2005: an increase of 384%.
Top Five
Robert J. Ulrich, Target $26,077,609
R. Lawrence Montgomery, Kohl's 22,463,875
Arlene Meier, Kohl's 13,935,338
James D. Sinegal, Costco 12,787,230
Jeffrey H. Brotman&, Costco 11,811,079
Bottom Five
Patrick J. Connolly, Williams-Sonoma $989,280
Alex Dillard, Dillard's 816,000
William Dillard, II, Dillard's 705,750
Frank L. Fernandez, Home Depot 318,500
Alan Rosskamm, Jo-Ann Stores 140,350


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