Macy’s (M) terrible 2015 hit CEO Terry Lundgren where it hurts.
Lundgren, the 13-year chief of the largest U.S. department store chain, got a total compensation package for 2015 of $11.7 million after Macy’s reported its first annual sales decline since the Great Recession. That was 29% less than the $16.5 million he got a year earlier.
The biggest source Lundgren’s decline was not getting any incentive award payment because Macy’s missed the mark in 2015 earnings before interest and taxes, sales, and cash flow, the compensation committee of the retailer’s board said in a proxy filed with U.S. regulators on Wednesday. Macy’s other top executives did not get incentive awards either.
The board also determined that neither Lundgren, 64, nor anyone on the leadership team would get a raise in 2016 because of the results.
Though Macy’s emerged from the economic downturn with much more ease than rivals like J.C. Penney (JCP) and Kohl’s (KSS), it has more recently lost a lot of customers to discount fashion chains like TJX’s (TJX) T.J. Maxx, and it blamed warm weather in the fall and winter for hurting apparel sales. The retailer also faulted a corporate reorganization early last year for distracting managers.
But the fact is that comparable sales had been growing at a slower and slower pace for four years before actually turning negative last year, hurt by a secular decline in mall traffic and consumers spending their money elsewhere. Adding to the pain was Penney’s comeback in the last two years, as well as soft business at its Bloomingdale’s upscale chain, which like luxury rivals Nordstrom (JWN) and Neiman Marcus, has felt a pullback from high-end shoppers.
Macy’s is trying to get back on track with its own T.J. Maxx-like business called “Backstage,” along with plans to open stores overseas later and continued investments in its e-commerce. It is also testing things like small areas in its store co-branded with Best Buy (BBY). But even if all those efforts ultimately work, they will take years to pay off: The retailer expects comparable sales to fall 1% this year. At least that would be an improvement over the 3% drop in 2015.
And with some on Wall Street forecasting Amazon (AMZN) eclipsing Macy’s as the top apparel retailer next year, the storied department store has a long road ahead of it to get back on track.