Wal-Mart's U.S. Chief Simon to Leave

By Dow Jones Business News, 
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Wal-Mart Stores Inc.'s head of Asia, Greg Foran, a New Zealander who has never worked in the U.S., is taking over the retailer's biggest division after U.S. chief Bill Simon stepped down.

Mr. Foran, a veteran of Australian retail who joined Wal-Mart three years ago, will take over from the 54-year-old Mr. Simon running the division, which has more than 4,200 stores and $279 billion in annual sales. Mr. Foran's successor will be announced at a later date.

Mr. Foran, 53, steps into the job at a time when Wal-Mart's U.S. namesake stores are stuck in a rut. In May, Wal- Mart's U.S. division reported its fifth straight quarter of negative U.S. sales, excluding newly opened or closed stores, and its sixth straight quarter of dwindling traffic.

The company is fighting to win back customers from dollar stores and pharmacy chains, as well as online competitors like Amazon.com Inc. Shoppers are making fewer trips to the company's signature supercenters and the retailer is trying to figure out a way to draw them back by opening up hundreds of smaller-format stores and pushing online sales.

"We know that our U.S. business is critical to the success of our company and that it can be even stronger," Mr. McMillon said in a letter to Wal-Mart employees on Thursday. "Greg will bring fresh eyes to an increasingly competitive market that is changing rapidly."

Mr. Foran hasn't run a company the size of Wal-Mart's U.S. division, whose sales are bigger than the combined revenue of Kroger Co., Costco Wholesale Corp. and Target Corp.

Mr. Foran joined Wal-Mart in 2011 after being passed over for the top job at Woolworths Ltd. in Australia. He served as president of Wal-Mart China, where he presided over the company's expansion as it tangled with compliance and government regulation. He was appointed head of Wal-Mart Asia in April.

Mr. Simon, a straight-talking outsider who joined Wal-Mart eight years ago, was among the favored candidates last year to succeed former chief executive Mike Duke, but he was passed over for the job, which went to longtime veteran Doug McMillon. The company said the two had discussed Mr. Simon's next career move on and off for the past few months, knowing that his leaving was a strong possibility. A departure arrangement was reached last week.

"This felt like the right time to move on and focus on my next opportunity," Mr. Simon said in a prepared statement. He will leave the company on Aug. 8 and has agreed not to work for a competitor for two years.

On Thursday, Mr. McMillon credited Mr. Simon with pushing Wal-Mart away from its large-format stores in favor of smaller ones, as well as with integrating online sales with physical stores.

Even so, he wasn't able to move the U.S. division fast enough. Despite new products like organic food and used video games, sluggish sales and traffic continue to weigh on the company.

Like Mr. Foran, Mr. Simon didn't cut his teeth at Wal-Mart the way many of its executives do. Before joining Wal-Mart in 2006, Mr. Simon served various roles at Diageo PLC, PepsiCo Inc., and former Florida Gov. Jeb Bush's administration.

Mr. Simon, who guzzles Monster energy drinks on a daily basis, notched early wins at the company. He helped push through the adoption of a $4 prescription-drug program and led a turnaround at its U.S. stores after a remodeling plan alienated Wal-Mart's core low income customers.

Wal-Mart--the country's largest private employer--continues to face complaints that it underpays its 1.4 million U.S. employees. The company has said its average hourly wage of $11.81 is in line with, or above, its peers.

Mr. Simon leaves with a retirement package that could be worth roughly $9 million in compensation and stock awards, including a $4.5 million payment that will be paid in installments through July 2016. Wal-Mart will keep Mr. Simon on as a consultant for the next six months, where he will earn about $300,000.

After Mr. Simon was passed over for Wal-Mart CEO, the board approved in January special retention bonuses for him, including a $2.5 million restricted stock award and a $2.5 million cash award contingent on the sales performance of the company's smaller-format stores.

Wal-Mart didn't break out how much of the retention bonus Mr. Simon will end up keeping. Over the past three years, Mr. Simon's compensation totaled $32.7 million, including salary, stock, cash incentives and retention awards.

Mr. Foran will receive an annual salary of $950,000 and will be eligible for performance stock awards on a prorated basis for the remainder of this year. He will be eligible for more than $13 million in performance shares though January 2017.

Mr. Foran also will be reimbursed for costs related to his move from Asia to the U.S. and will be eligible for personal use of company aircraft for "a limited number of hours."

Write to Shelly Banjo at shelly.banjo@wsj.com

Subscribe to WSJ: http://online.wsj.com?mod=djnwires


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