Erik Nordstrom, chief executive officer of Nordstrom Inc., saw his total compensation perk up to $4.5 million in 2023, a 30.8 percent increase from $3.5 million the year before.
Nordstrom’s take included a salary of $773,087 and incentive pay of $1.1 million. But the bulk of his pay came in the form of stock and option awards valued at a combined $2.7 million, although the value he will actually realize from that relies on the company’s share price and vesting schedules.
Pete Nordstrom, president and chief brand officer and Erik’s brother, received a nearly identical pay package.
But the brothers weren’t the company’s highest-paid executives. That distinction went to Cathy R. Smith, the company’s new chief financial officer, whose compensation tallied $8.5 million, and Jason Morris, the new chief technology officer, with total pay of $6.5 million. As is common practice for new executives, both pay packages were boosted by hefty stock awards — $6.5 million in Smith’s case and $4 million for Morris’.
The compensation packages were detailed in proxy statement and notice of its shareholder meeting, which is scheduled for May 22.
It was a tough year for the department store.
In a letter to the shareholders, signed by the Nordstroms and chairman Bradley D. Tilden, they wrote that last year, “In the face of big opportunities and complex challenges, our teams rose to the occasion, finding new and creative ways to further our purpose of helping our customers feel good and look their best. We continued to make progress against the priorities we identified at the outset of the year to drive better financial results and position our business for long-term growth: improving Nordstrom Rack performance, increasing our inventory productivity and advancing our supply chain optimization initiatives.”
The Rack off-price chain is on a roll, as Tilden indicated in his letter. He wrote that Rack stores “offer a great return on investment and serve as the primary source of new customers for our business, helping us drive more trips and strengthen our customer base. We look forward to continuing our momentum at the Rack by opening additional new stores [22 openings expected this year on top of last year’s 19] and offering our customers great brands at great prices.”
The Rack had been slumping for several seasons but in the fourth quarter showed marked improvement with sales increasing 14.6 percent to $1.4 billion. For all of last year, Nordstrom Rack generated nearly $4.8 billion in sales.
Rack’s recent performance helped Nordstrom report fourth-quarter net earnings of $134 million compared to earnings of $119 million in the year-ago period. Earnings before interest and taxes were $215 million in the fourth quarter compared with $187 million a year earlier.
For the fourth quarter, total company sales increased 2.2 percent versus the same period in fiscal 2022, inclusive of approximately $190 million related to the 53rd week, and gross merchandise value increased 2 percent. Nordstrom department store sales decreased 3 percent but sales for Nordstrom Rack increased 14.6 percent.
On April 8, Lori Marten was named Rack executive vice president and general merchandising manager.
Tilden wrote: “Across both our Nordstrom and Nordstrom Rack banners, we improved our merchandise assortment by right-sizing our inventory and investing in the products and brands we know our customers respond to. We also continued to strengthen our supply chain to get products into our customers’ hands more quickly, narrowing shipping windows and improving productivity throughout our network…In 2024, we are building on the momentum these investments have fueled. We remain focused on working more efficiently across our organization, honing our merchandising strategy and enhancing the shopping experience across our banners, both in our stores and online. This year, we’re looking forward to growing our online product assortment to offer our customers more choices and serve them on even more occasions. As we do this, we are creating a more personalized digital experience that makes it easy for our customers to shop that growing assortment and discover relevant brands and products.”
The Nordstrom family, which tried and failed to take the company private in 2018, has been reportedly looking for potential private equity to give a buyout another shot.
