Target Corp. Chief Executive Brian Cornell did not receive an incentive-based bonus last year because the retailer’s sales and profits slid and fell short of growth targets.
However, other executives did get some performance-based pay that was tied to strategic efforts, according to the Minneapolis-based retailer’s proxy it filed Monday with the Securities and Exchange Commission.
And Target’s board decided to offer more stock options to executives to help keep pay levels up since the company’s recently lowered growth targets for the coming year would likely mean financial and performance goals previously used to trigger bonuses won’t be reached in coming years.
Cornell was paid about $9.1 million in 2016. That includes a base salary of $1.3 million, $7.5 million in the value of vested shares and $330,532 in other compensation, according to the proxy.
In 2015, Cornell’s total compensation was nearly $9 million and included a $1.95 million bonus. He realized less from vested shares, $5.4 million, in that year than he did last year.
He did not receive a bonus last year since adjusted sales came in at $69.5 billion, about $2.1 billion lower than the board had set as a goal for the year. In addition, the company’s earnings before interest and tax came in at $5.1 billion, about $623 million lower than the goal.
Target was showing slow-but-steady growth until a year ago when its sales began declining amid fierce competition from Amazon and Wal-Mart. Shoppers also have been shifting their spending online, creating a lot of disruption in the retail industry. Target’s shares have dropped more than a third in the last year, from the low $80s to the mid $50s.
Other top Target executives received partial bonuses in 2016 because the board recently added in a team scorecard to reward them for performance beyond sales and profits related to the company’s strategic initiatives such as improving out-of-stocks and stabilizing its technology systems.
“Despite falling well short of the financial goals set at the beginning of the year, our management team drove meaningful progress against these key indicators,” Target said in the filing.
The company said its out-of-stock rates were “historically low” and that its website performed “flawlessly” during the holidays even during peak traffic times. And sales of products in the company’s “signature” categories — baby, kids, style and wellness — grew 3 percentage points faster than the company’s total sales.
Cornell was not eligible for the team scorecard grant. But other executives were granted a payout that amounted to 30 percent of their base salary.
Under the stock plan passed, Target last month decided to grant top executives price-vested options to supplement their compensation in order “to maintain continuity of the executive team throughout this investment period, galvanize them around the key initiatives and reward success in this transformational effort.”
Target, which moves the location of its shareholders meeting every year to reach out to different parts of the country, will conduct its meeting on June 14 in Cincinnati.