Terry J. Lundgren saw his overall compensation at Macy’s Inc. drop 13.1 percent last year despite a slight increase in his stock and option awards.
This story first appeared in the April 3, 2014 issue of WWD. Subscribe Today.
Lundgren, chairman and chief executive officer of the department store chain, collected total compensation of $12 million in 2013, compared with the $13.8 million reported for 2012.
His $1.6 million salary was unchanged and his cash bonus fell 3 percent to $1.85 million from $1.9 million, lowering the cash component of his pay 1.4 percent at $3.5 million.
The sum of his stock and option awards, conferred on the basis of company performance over a three-year period, rose 1.7 percent to $7.9 million.
The figures were included in Macy’s definitive proxy, filed with the Securities and Exchange Commission Wednesday.
The drop in Lundgren’s total reported compensation was entirely due to a reduction in the accounting metric known as “change in pension value and non-qualified deferred compensation earnings.” That figure was $2.5 million in 2012 but fell to just over $620,000 last year, its $1.9 million decrease greater than the $1.8 million decline in the total pay package.
Because of fluctuations in stock prices and vesting schedules, stock and option awards aren’t necessarily realized by the named executives but are required to be reported to the SEC at grant date fair market value.
Cash bonuses to Macy’s executives are based on earnings before interest and taxes, sales and cash flow. The firm’s compensation committee determined that Macy’s sales of $27.07 billion last year, after adjustment for unplanned store closings, were below the threshold level, while EBIT, at $2.77 billion, was between threshold and target levels, and the company’s cash flow of $1.83 billion was rated as outstanding. Stock and option awards take into account earnings before interest, taxes, depreciation and amortization; return on invested capital and total shareholder return.
Last year, Macy’s net income rose 11.3 percent to $1.49 billion, or $3.86 a diluted share, while net sales were up 0.9 percent to $27.93 billion. Excluding revenues from licensed departments, comparable sales increased 1.9 percent.
Jeffrey Gennette, promoted to president of Macy’s on Monday, earned $3.1 million as chief merchandising officer in 2013, down 34.1 percent from $4.6 million in the prior year. His salary rose 3.9 percent to $871,000 from $838,000, while his cash bonus declined 11.8 percent to $447,000.