Fucking typical

[giandujakiss]

Companies like to boast that their high-level executives are paid for performance, with incentive compensation packages that reward them when their companies do well.

Of course, that's a lie, because companies change the metrics in bad years to avoid allowing their executives to suffer pay decreases.

Case in point:

In a proxy statement filed a few weeks ago, Wal-Mart’s compensation committee said it had replaced a crucial metric for assessing executives’ performance: same-store sales, referring to stores that have been open for at least a year. Instead of that measure, Wal-Mart is using total sales companywide, or at its major units, Wal-Mart Stores and Sam’s Club.

The timing was certainly curious. The switch came amid a sustained decline in Wal-Mart’s same-store sales, which have been falling for nearly two years. The company’s total sales, however, rose 3.4 percent in the latest fiscal year.

Shifting the goal posts meant more money for Mr. Duke in the latest fiscal year than he would have received under the old arrangement.

Same-store sales are an important metric for investors. A quintessential apples-to-apples comparison, they measure the productivity at established stores and eliminate sales spikes that might occur when new stores open.

Aware that investors obsess over these figures, Mr. Duke told analysts recently that turning around Wal-Mart’s same-store sales was his top priority. Last February, when the company announced results that included the seventh consecutive quarterly drop for the figure, its share price fell 3 percent.

So why remove this crucial performance gauge for pay purposes? Wal-Mart did not respond to a request for comment on the matter

The switch at Wal-Mart last year followed a shift in 2009 that allowed the company to set performance targets annually. In previous years, the board had set performance targets for three-year periods. The goals had to be met over that time before company executives could receive certain incentive pay awards.

But wait! There's more:

Wal-Mart’s pay packages seemed especially unfortunate in light of the company’s decision late last year to end its longtime profit-sharing programs for lower-level workers. This arrangement was created by Sam Walton, the company’s founder, and was a source of considerable pride to him.

Last year, before Wal-Mart eliminated that profit-sharing program, it said it paid roughly $1.1 billion in profit-sharing and 401(k) matches to employees. In the future, it will offer only the 401(k) match.

“Taking away profit-sharing was the ultimate Ebenezer Scrooge story of the last holiday season,” Mr. Flickinger said. “Ebenezer makes all the money, and all the poor Cratchits working in the Wal-Mart stores become poorer and poorer.”