Shareholders chastised Sears, Roebuck and Co. officials Thursday at the company's annual meeting, taking issue with what they called hefty executive bonuses in a year in which the struggling retailer's stock lost nearly half of its value.
"You are getting overpaid, you don't deserve it and you are not doing your job," said George Polous, a Chicago resident who owns 2,000 shares of Sears' stock. "Wake up directors and wake up management."
The scene at Sears' Hoffman Estates headquarters reflected their frustration: Shareholders said they wanted more accountability from executives and boards of directors.
"What does the board do other than be a group that does what management wants?" questioned Robert Gilden, a shareholder from Palatine. "Do they ever disagree with management, and when did this happen?"
Chief Executive Alan Lacy's 2002 compensation included a $1.8 million bonus--nearly twice his annual salary.
When Lacy's compensation was compared with the return on Sears' stock, he ranked at the bottom of a recent Chicago Tribune analysis of local CEOs on pay for performance. Sears officials have said Lacy's incentives were based on meeting earnings-per-share and other strategic targets that did not include stock performance.
While Sears posted record revenue of $41.37 billion and earnings per share of $4.29 in 2002, reports of problems in its credit card division dragged the stock down to $23.95 by the end of the year. Sears' shares began trading in 2002 at $47.64.
On Thursday, Sears stock shed 54 cents, or nearly 2 percent, to close at $27.46.
Aggressive cost-cutting measures helped Sears earn a $1.38 billion profit in 2002, but retail sales have slipped for nearly two years. Sears reported Thursday that April sales at stores open for at least a year, the traditional measure of a retailer's performance, fell 8.5 percent. It marks the 20th consecutive month of same-store sales declines.
"It was worse than we would have liked," said Lacy, who addressed the crowd in a charcoal gray, three-button suit from the company's newly acquired Lands' End line. "But it was reasonable compared to what was a tough market."
As for the remainder of 2003, Lacy stuck with estimates of annual earnings per share between $4.75 and $5.15, and he put second-quarter earnings between 85 cents and $1 a share.
Sears hopes it can capitalize on several strategic moves including a revamped appliance sales program, a new stand-alone store called Sears Grand and the addition of its Covington and Lands' End apparel lines.
"Once again, this is a very important year for this company," Lacy said. "We have a lot more things to do."
Shareholders also griped Thursday that Sears elects directors who serve on too many corporate boards.
"I want people that are less encumbered with their own problems," said one shareholder. "I want uncluttered directors on my board that are not active on any more than two boards."
There are 10 board members at Sears, including Lacy. With the exception of Lacy, all the directors serve on two or more boards.
Shareholders also voted to elect directors on an annual basis instead of the current 3-year terms. The measure was approved by investors holding 60.6 percent of the company's outstanding shares. Still, that does not mean the board will adopt the measure.
Under the current format, shareholders elected Hall Adams Jr., Cantalupo and W. James Farrell to serve another three-year term on Sears' board.