CEO

Sears Interim CEO 2010 pay more than triples

AP News
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Posted: Apr 11, 2011 2:42 PM
Sears Interim CEO 2010 pay more than triples

Sears Holdings Corp.'s interim CEO W. Bruce Johnson, who gave up the top role in February, received compensation worth $5.3 million in 2010, more than triple the prior year, according to an analysis by the Associated Press.

Johnson, 59, received a salary of $979,487, up 15 percent from the previous year, which ended Jan. 29, according to a filing with the Securities and Exchange Commission on Monday.

The company, controlled by billionaire financier Edward Lampert, operates Sears and Kmart stores. It has struggled for more than a decade with declining sales and customer defections. Analysts say it desperately needs to renovate its stores to lure shoppers back.

The bulk of Johnson's compensation came in the form of stock awards valued at $4.3 million, up from $663,400 in the previous year. Johnson also received other compensation worth $24,983 as part of Sears' perks program.

His total compensation the year before was valued at $1.5 million.

Johnson served as interim CEO and president from February 2008 until the company named Louis J. D'Ambrosio, 46, permanent CEO in February. Johnson now serves as executive vice president of the company's off-mall businesses and supply chain.

Johnson's base salary was restored to $900,000 in fiscal 2010 following a voluntary temporary reduction of his base salary to $850,000 in fiscal 2009 as the company aimed to cut costs. In April 2010, Johnson's base salary was increased from $900,000 to $1 million. In addition, Johnson received 40,000 shares of restricted stock last year to be paid in equal installments over four years.

Sears is being squeezed by retailers from all sides. At Kmart, whose business has strengthened somewhat, it faces challenges in food as Target Corp. expands into groceries. Wal-Mart Stores Inc., the world's largest retailer, has stumbled with falling sales but is still a formidable competitor.

Sears' stores' strength has long been appliances and home goods, including the Kenmore and Craftsman brands, but those sales have weakened. Home-improvement chains Home Depot and Lowe's Cos. have been specifically targeting that category.

For the year ended in January, Sears earned $133 million, or $1.19 per share. This was off 43 percent from $235 million, or $1.99 per share, in the prior year. Adjusted earnings fell to $2.07 per share from $3.19 per share.

Annual revenue declined 2 percent to $43.33 billion.

Full-year revenue at stores open at least a year fell 1.6 percent, with Kmart posting a 0.7 percent increase and Sears reporting a 3.6 percent decline. The measure is a key indicator of a retailer's health.

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. The AP formula does not count changes in the present value of pension benefits. That makes the AP total slightly different in most cases from the total reported by companies to the Securities and Exchange Commission.

The value that a company assigned to an executive's stock and option awards for 2010 was the present value of what the company expected the awards to be worth to the executive over time. Companies use one of several formulas to calculate that value. However, the number is just an estimate, and what an executive ultimately receives will depend on the performance of the company's stock in the years after the awards are granted. Most stock compensation programs require an executive to wait a specified amount of time to receive shares or exercise options.