NEW YORK, N.Y. – Former Target CEO Gregg Steinhafel’s total pay fell 35 per cent to $13 million in his last year at the helm as the company’s board revamped compensation plans amid complaints from shareholders that he was paid too much, according to a regulatory filing.
Steinhafel, who had earned nearly $20 million in the previous year, stepped down from the chairman and CEO role and resigned from the board earlier this month in the wake of a massive data breach and a botched expansion plan in Canada that have hurt its sales and profits.
In documents with the Securities and Exchange Commission, Target described Steinhafel’s departure as an “involuntary termination for reasons other than cause.”
John Mulligan, the company’s chief financial officer, was named interim CEO while the company searches for a new leader. Steinhafel agreed to serve as an adviser during the transition.
Target said in documents filed Monday that more executive compensation is being tied to relative performance compared with similar companies. As a result, Steinhafel didn’t receive any option awards or cash bonus. A year ago, Steinhafel received option awards valued at $5.2 million and a cash bonus of $2.9 million.
Steinhafel’s base salary remained the same at $1.5 million. During his advisory period, he will continue to receive the same base salary and benefits that were in effect the day that he stepped down.
Steinhafel is eligible to receive $15.8 million in severance, according to documents filed Monday. He will also receive an additional $33.1 million from his deferred compensation plan.
Mulligan’s base salary increased to $1 million from $700,000 in his new role as acting CEO, but the company is freezing base salaries for all of the other current officers because of disappointing results. Last year, Target didn’t give any of its top officers short-term bonuses tied to its performance.
Mark Reilly, principal and head of executive compensation practice at Verisight, noted that Steinhafel’s pay of $20 million in the previous year was “generous” given Target’s lacklustre performance. The average Standard & Poor’s 500 CEO has annual pay of $10.5 million, Reilly estimates.
Target’s net income fell 34.3 per cent to $1.97 billion in the year ended Feb. 1. Revenue slipped 1 per cent to $72.6 billion.
Target reported in February that its fourth-quarter profit fell 46 per cent on a revenue decline of 5.3 per cent as the breach scared off customers.
On Dec. 19, 2013, Target disclosed a breach of 40 million credit and debit card accounts over a nearly three-week period before Christmas. Then on Jan. 10, the company said hackers also stole personal information — including names, phone numbers, and email and mailing addresses — from as many as 70 million customers.
Target said in February that it expects to feel the effects for some time. The breach has spawned dozens of legal actions that could prove costly.
The company is expected to report first-quarter results on Wednesday that will shed more light on the longer-term impact.
Analysts will also be looking to see whether Target has made any inroads in fixing its business in Canada, its first foray outside the U.S. Sales have been weak, and the retailer lost nearly a billion dollars in Canada in its latest fiscal year.
Shares slipped 42 per cent to $58.22 on Monday. The stock has slipped nearly 7 per cent for the year.
The Associated Press formula calculates an executive’s total compensation during the last fiscal year by adding salary, bonuses, perks, above-market interest the company pays on deferred compensation and the estimated value of stock and stock options awarded during the year.
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