Bill Simon, the face behind Wal-Mart's Made in America initiative, is leaving after eight years with the company and four years as head of the retailer's largest operating segment, Wal-Mart U.S.
He'll be replaced next month by relative newcomer Greg Foran, a 35-year retail industry veteran who was most recently president and CEO of Wal-Mart Asia.
The switch follows six straight quarters of traffic declines in stores and a five-quarter fall in same-store sales in the U.S. It was widely known that Simon, 54, was in the running for the company's top spot before Doug McMillon, 47, was named president and CEO of the world's largest retailer in November. McMillon took the big chair in February.
"You see this time and time again. When a CEO gets announced, it can only be one person, and the others who thought they were deserving of it slowly but surely defect," Brian Yarbrough, senior analyst for Edward Jones in St. Louis.
Performance in the U.S. under Simon's tenure also played a part in his departure, the analyst said.
"Let's be honest. It's not like the U.S. results have been lighting the world on fire," Yarbrough said. "I think he was doing some positive change, he was trying to be more omnichannel and do more with the Internet, focus on bringing back lower prices ... but the business was struggling.
"They say it was amicable, but I think it was a little bit of both" -- Wal-Mart wanting better, quicker results in its U.S. business and Simon being passed over for the job as Wal-Mart CEO. It's also telling, Yarbrough said, that McMillon picked Foran, 53, as Simon's replacement from the international division, which was McMillon's last post before becoming CEO.
"This is kind of Doug's guy," he said. "I think you're seeing Doug put his prints on the company and say, 'These are the people I think can drive growth for the company in the future and people I believe in.'"
Requests for interviews Thursday with Simon, McMillon and Foran were all declined.
"It's a good move for him and for the company," Wal-Mart spokesman Brooke Buchanan said of Simon. "He's looking for his next opportunity."
A filing with the federal Securities and Exchange Commission said Simon and the company reached an agreement on his resignation July 18, the deal was penned Wednesday and the announcement came Thursday. Foran will take over from Simon on Aug. 9, in the middle of the U.S. back-to-school shopping crush and less than a week before the retailer's second-quarter earnings are announced Aug. 14.
Also on Aug. 14, Wal-Mart will conduct its 2014 U.S. Manufacturing Summit in Denver, an event where hundreds of government officials and manufacturers get together and brainstorm about how to increase U.S. manufacturing jobs. The Made in USA initiative was Simon's baby.
Simon will stay on as a consultant through Jan. 31, during which time he'll be paid $50,000 per month to help Foran as he takes over. The stipend is a pittance compared with his severance package, which includes about $9 million in compensation and stock awards. Nearly 57,000 shares of restricted stock owned by Simon will be accelerated upon his departure.
As a consultant, Simon also will advise the company on projects related to Wal-Mart's commitments to hiring veterans and beef up U.S. manufacturing so Wal-Mart can sell more American-made goods.
"Wal-Mart is a complex business and Wal-Mart U.S. is a big part of the business," Buchanan said. "Bill will be there as an adviser and counselor to Greg and other leaders of the company to make sure that transition is seamless."
Foran has a background in grocery, where Wal-Mart U.S. also has struggled as of late. Wal-Mart is the nation's largest grocer by a long shot, but it's stores are not experiencing year-over-year sales increases in food products like its closest competitors, Kroger and Safeway.
"That's one of the areas they've been lacking," Yarbrough added.
Before joining Wal-Mart in 2011, Foran, a New Zealander, held senior roles with Woolworths Limited -- the largest retailer in Australia and New Zealand -- and left as director of supermarkets, liquor and fuel. When hired by Wal-Mart, he was put in charge of various international projects, then was president and CEO of Wal-Mart China for roughly two years before taking on Asia. Foran's successor is expected to be named at a later date.
"Being asked to lead the Walmart U.S. business is a privilege that I don't take lightly," Foran said in a release. "I am excited to get started. The needs of our customers are changing dramatically and we have an enormous opportunity to serve them in new and different ways. We must be fierce advocates for our customers, work meticulously to exceed their expectations and earn their trust every day."
Simon was the fifth highest-paid executive in Arkansas, with a compensation package of about $13 million in 2013. Foran will start with an annual salary of $950,000 plus performance-based cash incentives that could rise to as much as 300 percent of his salary and millions more through restricted stock and performance shares. Foran also will get a one-time cash payment of $500,000 related to the elimination of certain allowances and tax equalization associated with his move to the United States.
So where does one go from a top three job at Wal-Mart? It looks like nowhere -- for a while. Even though the top jobs at Target, Dollar General and other big-name retailers are currently open, a noncompete clause Simon signed when he took over as CEO of Wal-Mart U.S. in 2010 says he's not to own, manage, operate, finance or consult with any national or international retailer for two years.
Business on 07/25/2014