WMT » Topics » PAY FOR SUPERIOR PERFORMANCE

This excerpt taken from the WMT DEF 14A filed Apr 20, 2009.

PAY FOR SUPERIOR PERFORMANCE

Resolved:    That the shareholders of Wal-Mart Stores, Inc. (“Company”) request that the Board of Director’s Executive Compensation Committee adopt a Pay for Superior Performance principle by establishing an executive compensation plan for senior executives (“Plan”) that does the following:

 

   

Sets compensation targets for the Plan’s annual and long-term incentive pay components at or below the peer group median;

   

Delivers a majority of the Plan’s target long-term compensation through performance-vested, not simply time-vested, equity awards;

   

Provides the strategic rationale and relative weightings of the financial and non-financial performance metrics or criteria used in the annual and performance-vested long-term incentive components of the Plan;

   

Establishes performance targets for each Plan financial metric relative to the performance of the Company’s peer companies; and

   

Limits payment under the annual and performance-vested long-term incentive components of the Plan to when the Company’s performance on its selected financial performance metrics exceeds peer group median performance.

Supporting Statement:    We feel it is imperative that executive compensation plans for senior executives be designed and implemented to promote long-term corporate value. A critical feature of a well-conceived executive compensation plan is a close correlation between the level of pay and the level of corporate performance. The pay-for-performance concept has received considerable attention, yet all too often executive pay plans provide generous compensation for average or below average performance when measured against peer performance. We believe the failure to tie executive compensation to superior corporate performance has fueled the escalation of executive compensation and detracted from the goal of enhancing long-term corporate value.

We believe that the Pay for Superior Performance principle presents a straightforward formulation for senior executive incentive compensation that will help establish more rigorous pay for performance features in the Company’s Plan. A strong pay and performance nexus will be established when reasonable incentive compensation target pay levels are established; demanding performance goals are set in comparison to peer company performance; and incentive payments are awarded only when median peer performance is exceeded.

We believe the Company’s Plan fails to promote the Pay for Superior Performance principle in several important ways. Our analysis of the Company’s executive compensation plan reveals the following features that do not promote the Pay for Superior Performance principle:

 

   

Total compensation is targeted at the top quartile of the peer group.

   

The target performance levels for the annual incentive plan metrics are not peer group related.

   

The annual incentive plan provides for below target payout.

   

Annual incentive target payout amounts were doubled in 2008 because NEOs did not receive a substantial amount of target performance-based compensation in 2007.

   

The target performance levels for the performance share metrics are not peer group related.

   

The performance shares provide for below target payout.

 

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We believe a plan designed to reward superior corporate performance relative to peer companies will help moderate executive compensation and focus senior executives on building sustainable long-term corporate value.

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