Sears CEO Earns Bonus Despite Profit Fall

Mar 22, 2002

Sears, Roebuck & Co. Chairman Alan Lacy’s bonus slid 35 percent last year even though Sears’ earnings per share declined by more than 40 percent in 2001. The Sears annual shareholder proxy filed with the U.S. Securities and Exchange Commission shows Mr. Lacy received a $672,975 bonus for last year, compared with $1.04 million the previous year. But Lacy, who is also chief executive, won a 33 percent pay rise, bringing home $900,000.

Sears’ board of directors looked to a set of numbers that excluded the majority of the $650 million in after-tax, one-time charges Sears took last year, according to Sears spokeswoman Peggy Palter. The charges, which trimmed Sears’ earnings per share by $1.98, included “ones that the board determined weren’t within the 2001 executives’ control,” Ms. Palter says.

Altogether, Mr. Lacy took home $2.2 million in compensation last year, including $487,983 under a long-term compensation plan that is tied to increases in customer satisfaction, employee satisfaction and shareholder return.

Moderator Comment: How can companies work out equitable
compensation packages for top executives that do not hurt organizational morale
and adversely affect other stakeholders?

Executive compensation stories are becoming everyday
news. When business is up it isn’t such a big issue. When business drops off

We remember the story of a small company that had gone
through a major downsizing and its chief executive made a point of how everyone
was going to be required to make sacrifices for the company to right itself.
The next day, the same executive drove into the company parking lot in a brand
new Mercedes. Timing in business management (as they say in life and comedy)
is everything. [George
Anderson – Moderator

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