After a full year of sliding profits and stock prices, retail giant Target Corp. has announced a cut in pay for its CEO, Brian Cornell.
After a year of declining sales, tumbling share prices, and a major slide in its brand name, Target announced that Cornell’s compensation is to recede by nearly one-third, falling to $11.3 million, Reuters reported on Monday.
The reason for the cut in pay is that Cornell’s compensation is based on an incentive program. Growth for the company means growth for his take home pay. On the other hand, with the company losing billions year over year, Cornell’s incentive plan has predictably come up short.
The Target chief’s pay is based on two financial points, the company’s incentive EBIT — which makes up 75 percent of his stock component — and adjusted sales. But both have been in the dumps since last year.
As Reuters reported, “Target said it missed its 2016 Incentive EBIT goal of $5.74 billion by $623 million and fell short of its adjusted sales target of $71.62 billion by $2.13 billion.”
Financial advisor Paul McConnell insisted that the cut in Cornell’s pay was good to see. “You shouldn’t be getting rich when you are producing rotten numbers,” McConnell told Reuters.
Indeed, Target’s stock has fallen to lows not seen since 2014, the same year Cornell was hired, and is now down 10 percent, even over the price a year ago.
As of the end of trading on Monday, Target’s stock was at $55.77 a share, down from its last high of just over $87 early in 2016. The fall has continued since its sharp tumble in March of this year when the stock lost 12.2 percent in one day. And the company’s stock had already lost 24 percent over the previous three months at that time.
Despite major losses over the last year, Target has continued to claim it is doing just fine and that its plans for the future will bring it back from the ledge.
But the company has experienced much turmoil since early in 2016 when it announced a new policy of allowing men posing as women to be allowed to choose any bathroom or changing room they feel like using at any given time. It was an announcement that triggered a massive boycott petition, the #BoycottTarget petition organized by the American Family Association, which gained the support of over a million would-be Target customers in less than a month.
Target has also seen four quarters of sales declines in a row and has a loss of over $15 billion year over year. And since April of last year, the company’s brand name has also taken a drubbing. The fall was bad enough that many investment advisers downgraded Target to a “strong sell” even as its falling price might seem to make it an attractive buy.
By this April, Target’s CEO was reported as having opposed his own company’s transgender announcement, saying it “frustrated” him that his diversity department made such a fuss over the decision and that they didn’t clear the announcement with him first. Cornell thought the whole situation was mishandled and caused a massive backlash against the company. Insiders say he ultimately backed the policy but felt “stuck” with it.
Finally, only two weeks ago, Target fired yet another top executive as the company struggles to rebuild from the deficits.
Follow Warner Todd Huston on Twitter @warnerthuston or email the author at igcolonel@hotmail.com.
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