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goods products, experienced sustained sales growth and
profitability between 1988 and 1998, and attained $1 billion in
annual revenue by 1998. The following 12 companies met these
criteria: Barnes & Noble, Best Buy, Borders, Circuit City, CVS,
Home Depot, Kohl’s, Lowe’s, Staples, Target, Wal-Mart, and
Walgreen.
(ii) Proxy Statements
Using the comparison group companies’ proxy statements filed
with the Securities and Exchange Commission (SEC) for 1988
through 1998, Mr. Rowley obtained compensation data with respect
to salaries, bonuses, and long-term incentives (LTI).35 To
better reflect compensation for services rendered, Mr. Rowley
examined the comparable companies’ proxy statements for TYE 1999
in his analysis of compensation for TYE 1998.36 According to Mr.
Rowley, companies do not make variable compensation decisions
before the end of the fiscal year, and stock options shown on the
proxy statements as granted in TYE 1999 actually compensated
executives for services performed in TYE 1998.
35All but two of the companies in Mr. Rowley’s comparison
group compensated their CEOs with long-term incentives in the
form of stock options and/or restricted stock awards.
36For comparison companies with fiscal years ending in
December 1998, however, because Menards’s fiscal year ended in
January 1998, Mr. Rowley used the comparison companies’ TYE 1998
proxy statements.
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