Cost-cutting by the management of Belk Inc. last year boosted profitability but took an almost 40 percent bite out of the paycheck of chairman and chief executive officer Tim Belk, according to a proxy filed on Wednesday.
This story first appeared in the May 3, 2010 issue of WWD. Subscribe Today.
His total compensation was down 38.7 percent, to $1.7 million from $2.8 million in the previous year. While his salary was essentially unchanged at $870,000, neither he nor the company’s other executive officers received stock awards because of a decision by the retailer’s board to suspend them. Belk was eligible for but did not receive almost $1.4 million in such awards for 2008, although he reported this amount to comply with regulatory requirements. The firm doesn’t grant option awards.
Belk’s nonequity incentive plan compensation was roughly two-and-a-half times the 2008 level last year — $573,000 versus $228,000 — but would have been substantially higher if not for a decision by the board to reduce basic cash bonuses by half. Special “overperformance” awards, earned in recognition of exception fiscal performance, weren’t cut.
Bonuses were paid based on the retailer’s performance against established goals for earnings before interest and taxes (EBIT) and sales.
In addition to the reduction of bonuses and suspension of equity awards, the Charlotte, N.C.-based firm eliminated all merit-based salary increases. It also suspended the annual contribution to the supplemental executive retirement plan for the year.
In the proxy, Belk noted that the combination of its own management practices and the stabilization of the economy allowed it to meet and exceed its EBIT and sales targets, entitling top executive officers to the maximum bonuses available. While these amounts were cut in half, the overperformance award was retained without adjustment. It equaled 9.67 percent of an executive’s salary, in Tim Belk’s case about $84,000.
The retailer’s net income totaled $67.1 million last year, against an impairment-heightened loss of $213 million in 2008, as sales slid 4.4 percent to $3.35 billion. Gross margin gained to 32.1 percent of sales from 30.6 percent in 2008.
Among others in the Belk family, McKay Belk, president and chief merchandising officer, saw his total compensation slide 34.6 percent to $1.4 million from $2.1 million, and John Belk, president and chief operating officer, had a 33.7 percent cut, to $1.4 million from $2.1 million. Last August, McKay Belk began a 12-month sabbatical to engage in ministry-related work.