Macy’s CEO Jeff Gennette received an 18 percent pay hike to $12.7 million in 2018, as the company achieved eight of the nine performance goals established by its board one year ago.
Gennette’s pay was 582 times that of Macy’s median employee, who made $21,885 last year.
Details were disclosed in Macy’s annual proxy statement to shareholders.
“Returning Macy’s to positive, profitable growth was a significant goal in designing the 2018 annual incentive plan,” the document explained. “Performance measures and targets reflect this goal, were rigorously set and reward performance when achieved.”
Macy’s recorded its fifth straight quarter of sales growth in February, but its stock is down 22 percent since January 9, when the company revealed it would fall short of its sales goals for the holiday season. Gennette said holiday sales would have been better if Macy’s hadn’t changed the rules for a pre-Christmas promotional event, which was available only to its best customers in 2018.
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“Holiday is the time where we have a steady flow of new and occasional customers into the brand,” Gennette said in an earnings call. “We missed an opportunity to engage them more fully with our great values. We adjusted our promotional calendar for 2019 to address this.”
Despite the mishap, Macy's finished the year with $25.9 billion in annual sales, which was 1.04 percent above its internal targets. The compensation committee of Macy’s board judged that performance to be “above outstanding.” Cash flow and profit goals were also achieved, as were four of the five strategic initiatives laid out by the company for 2018. These included rolling out Macy’s Backstage concept to more than 100 locations and installing in-store pickup and same-day delivery in its stores. Macy’s failed to meet goals for improving its loyalty program.
All of that resulted in a $3.7 million bonus for Gennette, a 23 percent increase over last year. Stock awards grew 12 percent to $5.8 million. Base salary rose 4 percent to $1.3 million. Gennette also increased his use of the corporate jet in 2018, spending $71,204 on such travel compared to $4,482 in 2017.
Another big change involved the calculation of Macy’s median employee pay. It’s a required disclosure for all public companies to reveal how the CEO’s pay compares to the employee at the midpoint of all Macy’s paychecks. Last year, the company reported median pay of $13,810. This year, it jumped 58 percent to $21,885. That made its pay ratio look better. Last year, Gennette made 806 times the median employee at Macy’s. This year, it was 582 times median pay.
The difference comes from the date Macy’s chose to run its analysis this year. It was on the last day of its fourth quarter, after seasonal employees were let go following the holidays. Last year, Macy’s ran its median pay analysis on the first day of the fourth quarter. It made a big difference in the number of workers compared.
On February 2, 2019, Macy’s had 142,681 employees in the U.S., including 66,910 part-time or seasonal workers. On October 29, 2017, Macy’s had 179,785 U.S. employees, including 96,747 part-time or seasonal. With 37,000 more employees in the comparison last year, the employee at the midpoint of all salaries was bound to have a smaller paycheck. Macy’s identified this year’s median employee as “a part-time hourly sales associate.”