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.