What Walmart’s new focus on employee stock means for the labor market

Friday’s huge jobs number showed that the labor market remains highly competitive, with wage increases outpacing expectations, and the retail industry third among those with net job gains. It’s no surprise then that the biggest retailer, Walmart, is increasing its efforts to attract and retain workers. But what’s interesting is a new carrot that it is dangling before workers — its own publicly traded shares.

Walmart is offering its store managers stock grants, which based on a manager’s store format, can range between $10,000 and $20,000. That announcement came on the heels of Walmart’s decision to roll out a souped-up compensation package for managers.

“We ask our managers to own their roles and act like owners. And now they’ll literally be owners,” John Furner, the head of Walmart’s U.S. operations, said in a video posted on LinkedIn at the end of January.

It’s not only managers that Walmart wants to encourage to buy into stock ownership. The company just announced a 3-for-1 stock split, a move that it said was being made in part to allow more employees to buy into its stock purchase plan. “It was a good time to split the stock and encourage our associates to participate in the years to come,” Walmart CEO Doug McMillon said in a statement.

Walmart’s decisions come as it plans an aggressive store expansion plan, with 150 new superstores to be built over the next five years. The employee-stock related news also comes at a time when President Biden and his economic team have stepped up pressure on grocery chains to lower prices, citing operating margins that have still been rising even as other retail businesses see margins decline amid lower inflation.

As the nation’s No. 1 employer, Walmart’s decisions are likely to have significant ripple effects and could even lead to broader equity ownership among rank-and-file employees.

Granting stock to managers en masse is not as common in the retail industry as it is in other industries like technology, finance, and life sciences, industry consultants said. More commonly, in retail, companies use stock selectively, for special recognition of high performers or high-potential employees they want to lock in or retain, said Marc Roloson, senior director at WTW who focuses on the retail sector. 

But more companies, including department stores, movie theaters and restaurants have been thinking about granting equity broadly for mid-tier management, as a way to attract and retain good managers, said Aalap Shah, managing director at Pearl Meyer, a compensation advisory firm. Shah said. And the Walmart move is likely to accelerate these discussions.

“It’s not surprising that this is happening now that we’re on the other side of the Great Resignation,” Shah said. Companies are implementing strategies to keep workers “so they can shore themselves up.”

Walmart leads in compensation wars

For Walmart, the move is largely a competitive play that’s part of an overall redesign of its manager compensation for attraction and…

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