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Myron “Mike” Ullman 3rd could see his compensation quadruple in his first full year back as J.C. Penney Co. Inc.’s chief executive officer.
This story first appeared in the March 25, 2014 issue of WWD. Subscribe Today.
Ullman, the current and former ceo of the troubled midtier department store, earned $2.4 million after his return to Penney’s as ceo in April. The sum included $811,000 for the prorated portion of his $1 million in annual salary and other compensation of $1.6 million, including $913,000 in personal use of corporate aircraft, making that perk larger than his collective paychecks, according to the definitive proxy filed with the Securities and Exchange Commission.
But according to a subsequent SEC filing by Penney’s on Monday, that’s scheduled to change this year. Ullman’s base salary has been raised to $1.5 million and, after forgoing eligibility for stock and option rewards and a cash bonus in 2013 as the company faced a rapid cash burn and an uphill battle to turn itself around, this year he will be eligible for a cash bonus of up to twice his salary and equity awards of up to $5.5 million, making his potential pay package $10 million.
The payout on the awards is tied to such performance metrics as earnings before interest, taxes, depreciation and amortization and cash flow, as well as appreciation of the company’s stock and Ullman’s continuous employment with the company.
As during Ullman’s previous tenure, which ended with the now-departed Ron Johnson’s appointment as ceo in November 2011, he has no employment contract with Penney’s.
Since succeeding Johnson, Ullman has worked to shore up Penney’s capital structure through a number of moves, including a secondary stock offering and an arrangement to develop land adjacent to the firm’s headquarters in Plano, Tex. Sentiment about the company has improved since late February, when it reported a less-than-expected fourth-quarter loss coupled with an increase in comparable sales. Shares Monday closed at $8.60, up 1.3 percent and 75.5 percent above the 52-week low of $4.90 reached on Feb. 5.
As for pay packages detailed in SEC filings for other companies in the industry, at Kohl’s Corp., Kevin Mansell, chairman, president and ceo, saw his total compensation rise 4.6 percent last year, to $8.2 million from $7.8 million. His salary rose 0.7 percent to $1.3 million, matching an identical increase in his cash bonus, to $536,000. The sum of his stock and option awards rose 7.1 percent to $6 million.
The highest-paid Kohl’s executive last year was Michelle Gass, who left Starbucks to become chief customer officer in June. Her $12.1 million in reported compensation included a $1 million signing bonus and nearly $9.8 million in stock awards to make up for amounts forfeited by her departure from her former employer.
In another proxy filing, VF Corp. reported that total compensation for Eric Wiseman, chairman, president and ceo, fell 16.9 percent to $11.8 million last year as increases in his stock and option awards and salary were offset by declines in his cash bonus and the largely accounting-based “change in pension value and non-qualified deferred compensation earnings.”
Wiseman’s salary rose 4.2 percent to $1.25 million, and his stock and option awards expanded 31.6 percent to $7.8 million. However, his bonus, or non-equity incentive plan compensation, fell 21.4 percent to $2.3 million, and the change in pension value column dropped more than 90 percent to $372,000.
Because of vesting schedules and fluctuating stock prices, stock and option awards aren’t necessarily realized by the named executive but are required to be reported to the SEC at fair market value for the date on which they’re granted.