Retail executives nab big bonuses

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Retail executives nab big bonuses

By Louisa Hallett - 07/31/2018

It is a wonderful time to be a retail executive judging from a compensation analysis by executive search firm Korn Ferry.

A recent analysis by the consulting firm shows that the retail industry’s financial performance is improving.

Korn Ferry conducted an analysis of 65 North American retailers, with median annual sales of approximately $5.2 billion representing approximately 5.5 million employees. The study found that in 2018, nearly a third, or 29 percent, of retail corporate executives had bonus payouts of at least 100 percent of their targeted bonuses. In 2017, only 15 percent of retail executives received at least 100 percent of their target bonus. Conversely, the percentage of retail executives who received no bonuses took a fairly dramatic drop year-over-year, with only 5 percent receiving no bonus in 2018, compared to 29 percent receiving no bonus the year prior.

“Despite ongoing high-profile retail closures, the industry in general is continually evolving to attract customers and increase financial performance. That results in an increase in the size of bonuses retailers are able to award their executives,” said Craig Rowley, a Korn Ferry senior partner specializing in the retail industry. “Organizations are also widening performance ranges at which executives will be able to begin to earn their bonuses. This allows them to reward executives for business improvement as they strive to achieve their business plans in a competitive market.”

The bonus increases correlate to better financial performance in the industry. The National Retail Federation predicts retail sales will increase by approximately 4 percent in 2018 compared to 2017.

“We’re seeing a trend toward retailers taking a hybrid approach, with sales associates having access to the company’s e-commerce site to order product not in the store. There is also experimentation with showroom stores where consumers can see, touch and experience merchandise, but can then make their orders online,” said Rowley. “This gives consumers a chance to interact with a retailer and a brand, and also allows for smaller stores with less need for inventory space and sales personnel.”

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