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Retailers Rake in Higher Pay

Don Hogsett, Staff Staff -- Home Textiles Today, October 30, 2006

All things considered — and some of those things would include stock options, and the sweetening effect that chargebacks can have on a retail chain's profits and its executives' perks and pay — it's a whole lot better to be a retailer than a vendor these days, especially when it comes to carting your salary to the bank in a Brink's trunk.

Take the case of Robert Ulrich, chairman and ceo of Target Corp., who took home a total of $43.0 million last year — almost three times as much the combined total of just $15.5 million for all 12 textiles-vendor executives ranked in the seventh edition of HTT's annual Executive Compensation Survey. It's almost as good to walk out the door. As with Alan Lacy, the former Sears skipper,

who pocketed $23.2 million when he cleared out his desk.

Always the case, stock options played a disproportionate role in making up a retail executive's compensation, especially as those options, once an incentive for improving a chain's performance, have become institutionalized and routine, doled out even when comps or profits aren't what they used to be.

And without those stock options, most retail executives might be buying their suits at the same stores as textile executives. In Ulrich's case, for example, stock options exercised last year totaled $34.9 million, somewhat more than 80% of his entire pay package. A $6.5 million bonus also helped to swell the total. Pull those out, and his cash salary was $1.6 million, not that far removed from the $825,000 pulled down by Mohawk's Jeffrey Lorberbaum, ceo of a much smaller company.

But being a retailer doesn't make a big pay check a certainty, especially when it comes to the cash componeant of compensation, stock options aside. Over the past three years, one of every three executives in this year's ranking, 18 of the 54, took a cut in cash compensation. Notable was David Perdue, Dollar General ceo — and a man vividly remembered in the textiles business for his abbreviated tenure at the helm of Pillowtex Corp. — whose three-year cash compensation was slashed by 59.8%, to a total of $988,000 last year, with no stock options awarded. Another exec whose take-home pay sank when it came to cash compensation was Norman Axelrod, former Linens 'n Things ceo, whose three-year cash take was cut by 24.8%, to $904,000, no options awarded.

RETAILERS 3-YEAR SALARY VS. EARNINGS COMPARISON

Name Company Tot. Comp Change Sales Income
Michael D. Fisher Stein Mart 127.1% 9.6% 2211.9%
Alex Dillard Dillard's 100.1 -0.5 1200.1
William Dillard II Dillard's 87.4 -0.5 1200.1
Brad A. Waite Big Lots 69.4 6.1 -112.6
Robert J. Ulrich Target 65.4 25.3 33.1
Kevin B. Mansell Kohl's 63.6 30.3 44.9
R. Lawrence Montgomery Kohl's 61.2 30.3 44.9
Bernard Cammarata TJX 54.7 20.5 4.9
Robert A. Niblock Lowe's 49.4 40.2 50.3
Robert L. Nardelli Home Depot 41.0 25.8 35.6
Ken C. Hicks J.C.Penney 36.0 5.6 -214.2
Gregg W. Steinhafel Target 34.9 25.3 33.1
Francis S. Blake Home Depot 31.3 25.8 35.6
Michael T. Duke Wal-Mart 31.2 21.9 24.0
Jeffrey H. Brotman Costco 28.6 24.4 47.4
James D. Sinegal Costco 28.6 24.4 47.4
Thomas M.Belk, Jr. Belk 15.4 31.1 22.7
Alan Rosskamm Jo-Ann Stores 14.1 8.6 -157.4
Warren Eisenberg Bed Bath & Beyond 12.1 29.7 43.4
Leonard Feinstein Bed Bath & Beyond 12.1 29.7 43.4
Alan J. Lacey Sears Holding 6.3 NA NA
Jay R. Jacobs Pier 1 Imports 5.8 -4.9 -133.7
Marvin J. Girouard Pier 1 Imports 5.3 -4.9 -133.7
David Bolen Jo-Ann Stores 4.7 8.6 -157.4
Larry D. Stone Lowe's 4.0 40.2 50.3
Jay Stein Stein Mart 0.0 9.6 2211.9
W. Howard Lester Williams-Sonoma 0.0 28.5 36.7
Edward Mueller Williams-Sonoma 0.0 28.5 36.7
H. Lee Scott, Jr. Wal-Mart -2.9 21.9 24.0
Michael J. Marchetti Tuesday Morning -7.3 13.3 13.6
H.W. McKay Belk Belk -7.8 31.1 22.7
Terry J. Lundgren Federated Dept. Stores -8.6 46.7 102.9
Gary G. Friedman Restoration Hardware -9.9 32.6 1063.9
Michael Balmuth Ross Stores -12.7 26.1 -12.3
Edmond J. English TJX -15.9 20.5 4.9
John D. Reier Fred's -22.8 22.0 -20.4
Norman Axelrod Linens 'n Things -24.8 12.5 -50.5
Michael J. Hayes Fred's -25.5 22.0 -20.4
Kathleen Mason Tuesday Morning -26.1 13.3 13.6
Byron L. Bergren The Bon-Ton -28.3 38.9 26.3
R. James Kelly Family Dollar -29.5 22.6 -12.1
S. Kronick Federated Dept. Stores -36.0 46.7 102.9
Michael D. Contino Hanover Direct -37.3 -1.8 -150.0
Howard R. Levine Family Dollar -38.4 22.6 -12.1
Tim Grumbacher The Bon-Ton -54.9 38.9 26.3
David A. Perdue Dollar General -59.8 24.9 17.1


EXECUTIVE COMPENSATION RETAILERS
dollar amounts in thousands

Name, Title Company Total cash, stock options exercised Salary 2005 Bonus 2005 Total cash compensation Value of stock options exercised Total cash comp. 3-yr. % change 2003-2005
1. Joined company on Dec. 1, 2004.
2. President and ceo from Feb. 26, 2003, chairman from Jan. 15, 2004.
3. Elected chairman in January 2003.
4. Prior to the merger of Sears, Roebuck and Kmart, he served as president of Kmart. Joined Kmart in October 2004.
5. Joined company in July 2005.
6. Joined company in Jan., 2005.
7. Named president and ceo in May, 2004.
Robert J. Ulrich, chairman and ceo Target $42,973 $1,558 $6,500 $8,058 $34,915 65.4%
Alan J. Lacey, vice chairman Sears Holding 23,219 1,263 772 2,035 21,184 6.3
Michael Balmuth, vice chairman, president and ceo Ross Stores 11,805 978 613 1,591 10,214 -12.7
Gregg W. Steinhafel, president Target 11,743 1,015 1,162 2,177 9,567 34.9
Robert L. Nardelli, chairman, president and ceo Home Depot 11,154 2,164 7,000 9,164 1,989 41.0
R. Lawrence Montgomery, ceo Kohl's 10,035 1,022 613 1,636 8,400 61.2
Edmond J. English, former president and ceo TJX 8,644 1,300 788 2,088 6,556 -15.9
Kevin B. Mansell, president Kohl's 6,749 893 536 1,428 5,321 63.6
H. Lee Scott, Jr., president and ceo Wal-Mart 5,234 1,292 3,942 5,234 0 -2.9
Robert A. Niblock, chairman, president and ceo Lowe's 5,143 850 2,550 3,400 1,743 49.4
Michael T. Duke, vice chairman Wal-Mart 5,061 768 1,141 1,909 3,152 31.2
W. Howard Lester, chairman Williams-Sonoma 4,349 975 731 1,706 2,642 0.0
Jeffrey H. Brotman, chairman Costco 4,278 350 100 450 3,828 28.6
James D. Sinegal, president and ceo Costco 4,199 350 100 450 3,749 28.6
Myron E. Ullman, III, 1 chairman and ceo J.C.Penney 4,163 1,500 2,663 4,163 0
Terry J. Lundgren, 2 chairman, president and ceo Federated Dept. Stores 3,370 1,293 2,078 3,370 0 -8.6
Kathleen Mason, president and ceo Tuesday Morning 2,605 573 0 573 2,032 -26.1
Larry D. Stone, sr ex vp, merchandising/marketing Lowe's $2,326 $730 $1,460 $2,190 $136 4.0
Howard R. Levin,e 3 chairman and ceo Family Dollar 2,275 728 0 728 1,546 -38.4
Alex Dillard, president Dillard's 2,057 650 591 1,241 816 100.1
William Dillard II, ceo Dillard's 2,036 740 591 1,331 706 87.4
S. Kronick, vice chairman Federated Dept. Stores 1,808 1,005 803 1,808 0 -36.0
Edward Mueller, ceo Williams-Sonoma 1,706 975 731 1,706 0 0.0
Michael D. Fisher, president and ceo Stein Mart 1,540 691 544 1,236 305 127.1
Francis S. Blake, ex vp – business development and corporate operations Home Depot 1,510 685 825 1,510 0 31.3
Aylwin B. Lewis, 4 ceo and president Sears Holding 1,510 1,000 510 1,510 0
Ken C. Hicks, president and chief merchandising officer J.C.Penney 1,444 765 679 1,444 0 36.0
Thomas M.Belk, Jr., chairman and ceo Belk 1,349 757 592 1,349 0 15.4
Steven S. Fishman, 5,chairman, ceo and president Big Lots 1,285 535 750 1,285 0
Tim Grumbacher, ex chairman The Bon Ton 1,278 650 0 650 628 -54.9
Leonard Feinstein, co-chairman Bed Bath & Beyond 1,100 1,100 0 1,100 0 12.1
Warren Eisenberg, co-chairman Bed Bath & Beyond 1,100 1,100 0 1,100 0 12.1
H.W. McKay Belk, president and chief merchandising officer Belk 1,078 663 415 1,078 0 -7.8
Lisa Panattoni, 6ex vp merchandising Ross Stores 1,041 541 500 1,041 0
Marvin J. Girouard, chairman and ceo Pier 1 Imports 1,000 1,000 0 1,000 0 5.3
David A. Perdue, chairman and ceo Dollar General 988 988 0 988 0 -59.8
Michael J. Marchetti, ex vp and coo Tuesday Morning 909 361 0 361 548 -7.3
Brad A. Waite, ex vp Big Lots 907 500 375 875 32 69.4
Norman Axelrod, former chairman and ceo Linens 'n Things 904 904 0 904 0 -24.8
Wayne P. Garten, 7 president and ceo Hanover Direct 850 600 250 850 0
R. James Kelly, vice chairman, chief financial and administrative officer Family Dollar 812 463 0 463 350 -29.5
Alan Rosskamm, chairman, president and ceo Jo-Ann Stores 763 738 0 738 25 14.1
Byron L. Bergren, president and ceo The Bon Ton 737 737 0 737 0 -28.3
Bernard Cammarata, chairman and acting ceo TJX 631 631 0 631 0 54.7
Jack E. Moore, former president & coo Linens 'n Things 586 586 0 586 0
Gary G. Friedman, president and ceo Restoration Hardware 510 510 0 510 0 -9.9
David M. Tehle, ex vp and cfo Dollar General 480 480 0 480 0
Marta H. Benson, sr vp, gm of direct business Restoration Hardware 441 324 0 324 117
David Bolen, ex vp, merchandising and marketing Jo-Ann Stores 417 417 0 417 0 4.7
Michael D. Contino, ex vp and coo Hanover Direct 412 387 25 412 0 -37.3
Jay R. Jacobs, ex vp, merchandising Pier 1 Imports 365 365 0 365 0 5.8
Jay Stein, chairman Stein Mart 300 300 0 300 0 0.0
John D. Reier, president Fred's 250 250 0 250 0 -22.8
Michael J. Hayes, chairman and ceo Fred's 220 220 0 220 0 -25.5


RETAIL SALARIES
Top and bottom 5 retailers by 2005 salary*

*straight salary, excluding bonus, other cash compensation and stock options
Top Five
Robert L. Nardelli, Home Depot $2,164,423
Robert J. Ulrich, Target 1,557,692
Myron E. Ullman, III, J.C.Penney 1,500,000
Edmond J. English, TJX 1,300,000
Terry J. Lundgren, Federated Dept. Stores 1,292,500
Bottom Five
James D. Sinegal, Costco $350,000
Marta H. Benson, Restoration Hardware 323,636
Jay Stein, Stein Mart 300,000
John D. Reier, Fred's 250,000
Michael J. Hayes, Fred's 220,000


RETAIL CASH BONUSES
Top and bottom 5 retailers by 2005 bonus

Top Five
Robert L. Nardelli, Home Depot $7,000,000
Robert J. Ulrich, Target 6,500,000
H. Lee Scott, Jr., Wal-Mart 3,941,561
Myron E. Ullman, III, J.C.Penney 2,662,500
Robert A. Niblock, Lowe's 2,550,000
Bottom Five
Brad A. Waite, Big Lots $375,000
Wayne P. Garten, Hanover Direct 250,000
James D. Sinegal, Costco 100,000
Jeffrey H. Brotman, Costco 100,000
Michael D. Contino, Hanover Direct 25,000


RETAIL STOCK OPTIONS EXERCISED
Top and bottom 5 retailers by 2005 stock options exercised

By far the lion's share of most retail execs' compensation packages comes out of stock options. Just how much are those options worth? A whole lot, frequently more than 80% of an executive's total pay, and sometimes even more. For Sears Holdings' Alan Lacy, $21.2 million, a whopping 91.2% of his total compensation; for Michael Balmuth, Ross ceo, $10.2 million, 86.5% of his total take; for R. Lawrence Montgomery, Kohl's ceo, $8.4 million, or 83.7% of his pay; for Target president Gregg Steinhafel, $9.6 million, 81.5% of his pay package; and for Target ceo Robert Ulrich, the 2005 leader as he was in 2004, those options were worth $34.9 million, 81.2% of his total compensation of $43.0 million.
Top Five
Robert J. Ulrich, Target $34,915,425
Alan J. Lacey, Sears Holding 21,183,781
Michael Balmuth, Ross Stores 10,213,813
Gregg W. Steinhafel, Target 9,566,620
R. Lawrence Montgomery, Kohl's 8,399,666
Bottom Five
Michael D. Fisher, Stein Mart $304,600
Larry D. Stone, Lowe's 135,942
Marta H. Benson, Restoration Hardware 117,203
Brad A. Waite, Big Lots 32,014
Alan Rosskamm, Jo-Ann Stores 24,500


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