Joe Torre And Wal-Mart's Lee Scott: Parallel Lines?
The world's largest retailer has spawned this blog's biggest response ever! The anti-Wal-Mart emails (some 655, almost all I would say from Wal-Martwatch.com readers) keep pouring into the Retail Detail inbox. We'll continue to post your thoughts and responses so keep them coming. I've yet to hear from any on the pro Wal-Mart side.
In the meantime, be prepared for news out of Wal-Mart this week as well as movement in their stock price. The discounter hosts its annual investors meeting on Tuesday and Wednesday down in Wal-Mart Country, Bentonville, Arkansas. Expect the stock to get at least a mini-boost as these analyst meetings and investor conferences typically do create at least a momentary sense of euphoria around any company.
Investors tend to get more skeptical about the financials when they're crunching their numbers behind a desk and not roaming the very impressive spanse of Wal-Mart Country.
Anyhow, in a note today analyst Charles Grom at JP Morgan made an interesting parallel between now former Yankees Manager Joe Torre and current Wal-Mart CEO Lee Scott. Torre was just de facto shown the door after an impressive run in the managers seat of one of the most storied teams in baseball.
While the Yankees were the top team in the MLB for years, Torre was booted for "not getting beyond the first round the last three years with the richest managerial contract ($19.2 M) in baseball history" (per Murray Chass of the New York Times.) Grom points out that since Lee Scott became CEO in 2000, Wal-Mart's stock has compressed around 5% vs. a 104% gain in target and a 14% rise in the S&P 500.
With compensation at $10.46 million this year ($40.47M over 5 years), Scott is highly compensated and scrutinized for his performance at the helm of Wal-Mart. Investors have been making noise for awhile about Wal-Mart's stagnant stock price and slowing U.S. growth. (Of course, it is fair to ask just how much bigger the behemoth can grow.) Analyst Grom summarizes, "sooner or later, the board (ala Yankee owner George Steinbrenner) will need to act accordingly, in our view, if sales continue to stay sluggish."
The media and analysts will be listening closely to the developments at Wal-Mart over the next few days. Any hint of discontent with management will surely make headlines.
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