Wal-Mart awards $2 billion to U.S. hourly employees

Wal-Mart awards $2 billion to U.S. hourly employees

By Andria Cheng, MarketWatch

March 19, 2009

NEW YORK (MarketWatch) -- At a time when many companies have curtailed bonuses and merit raises, Wal-Mart Stores Inc. said Thursday it is increasing its incentives to its U.S. hourly associates by 11% to about $2 billion.

In a memo to employees Thursday, Wal-Mart CEO Mike Duke said the award includes $933.6 million in bonuses, which jumped by almost half from last year, $788.8 million in profit sharing and 401(k) contributions, and millions of dollars in merchandise discounts and contributions to the associate stock purchase plan.

About 1 million of the company's employees, who earn an average hourly rate of $10.83, received a bonus Thursday, Wal-Mart (WMT 49.95, -0.49, -1.0%) spokesman David Tovar said in an interview.

The world's largest retailer has outpaced its rivals with its low-price message that clicks with budget-conscious shoppers, analysts have said. Wal-Mart is the No. 2 best performer in the Dow Jones Industrial Average, after McDonald's Corp. (MCD 54.71, -0.71, -1.3%) . Wal-Mart shares are down 1.5% in the past 12 months compared with the 39% decline in the Dow.

"Our strategy is working and we're building momentum," Duke said in the memo.

Wal-Mart (WMT 49.95, -0.49, -1.0%) , through its "Save Money. Live Better" marketing tagline, generated February same-store sales gain of 5.1%, compared with the flat industry rate and a 4.1% drop at its top discount rival Target Corp. (TGT 31.43, -0.15, -0.5%) .

Wal-Mart profit last year rose 5.2% to $13.4 billion. Sales jumped 7.2% to $401.2 billion.

On top of its price message, analysts have credited Wal-Mart with its moves to update stores, improve customer service, introduce products such as its exclusive l.e.i. line of teen apparel and jump faster on popular trends such as staging events and merchandise tied to the popular teen vampire movie "Twilight."

Bonus and other incentive plans for the company's overseas employees are being worked out separately, Tovar said. The company's executives and other employees also are receiving merit raises as normal.

Andria Cheng is a MarketWatch reporter based in New York.