Dive Brief:

• Macy’s board of directors decided to cut performance bonuses to the bone after the retailer missed on revenue, cash flow, earnings and expenses goals in 2015, according to a filing with the Securities and Exchange Commission. 

• The board awarded zero in bonuses to executives. CEO Terry Lundgren received $11.6 million last year, an 8.6% decrease from the $12.7 million he received in 2014. In 2012 his compensation package was similarly cut 22% from the previous year, as Macy’s battled the effects of the Great Recession.

• Macy’s has continued to struggle, recently shaking up a few executive spots and yielding to pressure from activist investors to unlock value from its real estate holdings. 

Dive Insight:

Macy’s CEO Terry Lundgren has been down this road before, taking a hit to his wallet in response to Macy’s struggles. Setting aside the fact that Lundgren’s base pay remains among the highest in the land even without his bonus incentive, it’s worth asking whether Macy’s board is assessing his performance in the right light—or, more accurately, within the right time frame.

While Macy’s board took into consideration the department store’s performance in 2015, perhaps it should be looking at longer-term results than quarter-by-quarter, year-by-year increments, especially with a retail model that was invented more than a century ago. Of course, investors likely wouldn’t let them, and that may be a problem for retail, especially for department stores like Macy's that may need significant change.

Retail futurist Doug Stephens told Retail Dive late last year that investors often expect double-digit returns, and that leaves retail companies little wiggle room to thrive.

“The notion of building a business that really is a great business that serves a defined customer set—I think we have lost sight of that,” he said. “We’re seduced by this notion if I’m an investor and I'm not getting double digits, I’m not happy. When did 5% growth become a bad thing? It’s greed on the part of markets and the companies, and leads smart people away from making good decisions.”

Macy’s Q4 same-store sales fell 4.3% on an owned plus licensed basis, beating its own expectation of a 4.7% drop, the company reported last month. Overall 2015 same-store sales fell 2.5% on the same basis. Tepid sales of winter apparel muted the retailer’s performance over the holiday season and accounted for 80% of the Q4 sales dip, according to Lundgren, but January saw healthier sales as the weather turned colder.

Last week, Macy's said it would hire a specialist to help decide what to do with its vast real estate holdings and is mulling joint ventures with other companies to manage its flagship and mall-based stores. Macy's subsequently named real estate investment expert William H. Lenehan to its board of directors, effective April 1. Lenehan is president and CEO of real estate investment trust Four Corners Property Trust, Inc. and has extensive experience in real estate development and investment.