The package is anchored by a stock grant of about $20 million to cover incentives Cornell is leaving behind at PepsiCo Inc., where he has been the leader of its U.S. foods unit.
It’s common for companies luring a new CEO to replace the potential value of payments and incentives at the executive’s previous company.
For Target, Cornell’s compensation package hinges in part on how much of a bonus PepsiCo decides to give him for his work in 2014. As well, Cornell may wind up keeping some stock awards from PepsiCo. If he does, Target’s incentives to him will be reduced.
In a filing with federal securities regulators Thursday, Target said Cornell’s base salary will be $1.3 million, which is $200,000 less than his predecessor Gregg Steinhafel received as a base. Cornell will also be eligible for a performance bonus of up to $1.95 million, or 150 percent of his base salary, depending on Target reaching goals set by the board.
He is also being given Target stock that is currently valued at $12.75 million, including an initial stock grant worth of $3.75 million and a grant valued at $9 million in January 2015.
To cover the incentives Cornell is leaving at PepsiCo, Target will give him another batch of shares worth $19.25 million minus the stock he is eligible to retain from PepsiCo, in what Target called a “Make Whole Equity Grant.”
He also will get a “Make-Whole Pro Rata Annual Bonus Payment” that could be worth $1.35 million. Target will pay the difference between his partial-year bonus at PepsiCo and the $1.35 million.
Target said it hasn’t been able to precisely determine either of the “make whole” portions of Cornell’s incentive compensation. Cornell will also be eligible for other benefits available to Target’s executive officers.
By contrast, Steinhafel last year took home $16 million in total compensation, including a $1.5 million base salary and $14 million he realized from previously-issued stock options and restricted stock.
In his departure, Steinhafel received $21.3 million in severance and $37.6 million in retirement benefits accrued through deferred compensation plans over his 35-year career with the company.
Patrick Kennedy • 612-673-7926