Although the retail industry has its challenges, consumer confidence is at the highest point in 15 years. Still, the pressure coming from e-commerce sales has affected not only the profits of physical stores but also how the executives running them are paid.
According to a recent survey by Compensation Advisory Partners (CAP), only 26% of businesses paid bonuses above target in 2016 and median bonus payout was 51% of the target in 2016, compared to 112% in 2015.
The survey focused on pay versus performance and inventive design among 33 well-known brands. The retail categories were divided up into multiline retail, big-box retail and mall-based specialty retail.
For all of the retailers in the study, median revenue was up 2% from the prior year, while operating income declined 2%. More specifically, multiline retail had flat revenues and profits decreased 2% in large part from the effects of e-commerce sites.
Big-box retailers faired better, with a 7% increase in revenue and a 4% increase in operating income.
"The majority of companies paying above target bonuses were big-box retail companies, reflective of better overall performance results versus other industry segments in our study," Matt Vnuk, a principal at CAP, told FierceRetail.
RELATED: Walmart pays $200M in bonuses to stores
And mall-based specialty retailers saw revenues increase 2%, down from the 4% in 2015, and operating income fell 7%. Analysts believe the decrease in profits came from the increased pressure to put items on sale and the decline in mall traffic.
The study looked at how these fluctuations in income reflected the salaries of retailer CEOs. Multiline retailers had the biggest decrease in awarded bonuses, reflecting the flat performance of the segment.
And even as big-box retailers performed better than the other two segments, bonuses were down 9% for company CEOs.
Similarly, mall-based specialty stores had generally lower bonuses seeing as performance was also weaker than in 2015 in terms of revenue and operating income.
Overall, the CEO bonuses seemed to align with the broader U.S. market. But within the industry, mall-based specialty retailers gave more for annual salaries and bonuses compared to other retail companies studied.
"On average, 75% percent of long-term incentive awards come with prospective performance requirements. This supports alignment of ongoing pay and performance," added Roman Beleuta, senior associate at CAP.