Poor sales performance and turbulent stock have ticked off Macy’s board of directors, and a regulatory filing Wednesday revealed that its top executives would not be rewarded for the retailer’s bad behavior.
After missing the mark on sales, earnings and cash flow in 2015, the board voted that no bonuses would be paid to the following senior staff members: CEO Terry Lundgren; Karen Hoguet, chief financial officer; president Jeffrey Gennette; Jeffrey Kantor, chief stores officer; and Peter Sachse, chief growth officer.
Lundgren’s total compensation also took a hit. Excluding changes in the value of his pension, he was paid nearly $11.7 million last year—that was 29 percent less than the $16.5 million he took home in 2014. The board also decided that Lundgren and the other named executives would not be getting a pay raise in 2016.
The news did not come as a shock. Sales at Macy’s dropped 3.7% to $27.08 billion in 2015, while net income was $1.07 billion, a nearly 30 percent decline from the prior year’s $1.53 billion.
The retailer hit the headlines a few days into 2016 when it announced double-digit store closures and thousands of job cuts as part of a plan to reduce expenses by $400 million this year. But Moody’s Investor Service is skeptical, noting in a recent report that the retailer’s continued investments in e-commerce and its off-price offering “Backstage,” as well as wage pressure, will offset the flow-through of these savings.
“We are looking at 2016 as a transition year for the company,” Christina Boni, a Moody’s vice president and senior analyst, said, adding that she does expect the situation to pick up. “Although the company may temporarily stay above its leverage target as it continues to invest and stabilize sales, we believe that these initiatives will pay off and that Macy’s will stabilize sales and expand margins in 2017.”