chief executive officer Michelle Gass
received a 3% increase in her base salary and her total compensation climbed to more than $12.9 million in 2021 as the company surpassed annual incentive targets set by its board.
Executive compensation has been among the issues raised by a group of activist investors pushing for changes to the board of the Menomonee Falls-based retailer. In securities filings, Macellum Capital Management specifically highlighted a 43% increase in Gass’ total compensation for 2020.
The jump in pay from 2019 to 2020 was made possible by a number changes and decisions made by the Kohl’s board and compensation committee to address the impact of the COVID-19 pandemic. For example, the board used annual measures in its 2018-2020 long-term incentive plan, allowing for it to still pay out and the 2020 annual incentive plan incorporated more discretionary elements and comparisons to peers.
For 2021, the company returned to using objective financial goals in setting its long-term and annual incentive programs. The company also incorporated other retailers like Best Buy, Dollar Tree, Dick’s Sporting Goods, Foot Locker, Burlington, Ulta Beauty, L Brands and Dillard’s into its peer group analysis.
For annual incentives, the company set a net sales goal of $16.966 billion and an operating income goal of $817 million. Kohl’s ultimately reported net sales of almost $18.5 billion and operating income of $1.68 billion, exceeding the maximum levels for the incentive on both measures.
As a result, Gass was eligible for a payout equal to 262.5% of her base salary or $3.87 million, more than double the $1.57 million payout from 2020.
Gass’ total stock awards declined from nearly $8.9 million in 2020 to $7.25 million in 2021 as the adjustments made in the first year of the pandemic did not repeat. A $939,000 bonus from 2020 also did not repeat.
The other elements of her total compensation to increase included her total salary, which went from $1,253,882 to $1,467,750. Her 3% raise took effect in April 2021 and she had waived her salary in 2020 while the company’s stores were closed by the pandemic.
Two Kohl’s executives, Jill Timm, chief financial officer, and Paul Gaffney chief technology and supply chain officer, received 7.5% salary increases while Doug Howe, chief merchandising officer, saw a 3% bump and Greg Revelle, chief marketing officer, was up 2.9%.
The other portion of Gass’ total pay to increase was the "all other compensation" category, which increased from $242,683 to $335,198. Nearly all of the increase was the result of accounting for Gass’ personal use of company aircraft, which increased from $130,579 to $221,429. For 2019, prior to the onset of the pandemic, that category totaled $197,490.
While her total pay was up, the ratio of Gass’ pay to the median Kohl’s employee declined slightly from 1,098:1 in 2020 to 1,084:1 in 2021. The median employee pay went from $11,708 to $11,921 in the past two years.