Business Briefs

Kmart chairman and ceo Chuck Conaway, on the job for just eight months, picked up a $9.5 million pay package, including cash, stock and options, for his work to date in restoring the fortunes of the giant discount chain.

In a proxy filed with the Securities and Exchange Commission and being mailed out to shareholders, Kmart said Conaway receives an annual salary of at least $1.4 million, and is eligible for a performance-based bonus of at least 125 percent of his annual salary. Last year, the bonus totaled $1.75 million.

Conaway, who joined the company last May, also received a $2.5 million signing bonus and another $3.8 million in cash and stock sign-on bonuses. He also receives a housing allowance and use of the company plane as part of his compensation package.

Former chairman and ceo Floyd Hall, who retired in June, received a pro-rated salary of $519,000 and a performance-based bonus of $486,500. Hall was also hired as a consultant with a monthly fee of $235,625. That agreement expires in June.

Lee Scott, ceo of Wal-Mart, the world's largest retailer, picked up about $2.7 million in pay and bonus for his first year in the position, according to proxy materials filed with the Securities and Exchange Commission and sent out to stockholders.

Scott was promoted to the top spot in January 2000 and earned a salary of $992,308 as well as a bonus of $1.75 million.

In addition to the $2.7 million in cash, Scott received restricted stock valued at $6.1 million, and options with a potential value of $8.2 million.

This year, Scott gets a raise of almost 11 percent, with his base salary going up to $1.1 million, effective February 2001.

Scott, who had been coo until being named ceo in January 2000, replaced David Glass in the top spot. Glass remains a full-time member of the board of directors and received a combined $2.9 million in salary and bonus.

Slogging through a soft economy and a prolonged retail slowdown, Dillard's Inc. became the latest major retailer to have its debt ratings cut to junk bond status by Moody's Investors Service.

Last month, Moody's reduced its ratings for giant J.C. Penney Co. to junk-bond status.

Moody's downgraded the Little Rock, AR-based retailer's debt and bank credit lines by a single step to "Ba1," its highest junk-bond grade, from "Baa3." The retailer's commercial paper rating was cut to "Not Prime" from "Prime-3." The ratings actions affected about $4.5 billion of debt and bank loans. Moody's said the rating outlook for the company is now stable.

Moody's blamed the downgrade on the retailer's 1998 acquisition of Mercantile Stores, another department store chain, saying it "stretched the company's operational capability and resulted in the ongoing deterioration in Dillard's financial profile." Complicating the picture, said Moody's, was overall sluggish consumer spending and a sluggish retail environment that forced Dillard's to step up markdown, putting margins and profits both under heavy pressure.

Underlining the impact of the retail slowdown on Dillard's, same-store sales at the department store chain dropped by 13 percent in March, one of the biggest declines posted by a major retailer. Total sales for the month fell by 13 percent, to $720.4 million from $826.0 million, a shortfall of more than $105 million. For the nine weeks year to date, Dillard's same-store sales were off by 8.0 percent, with overall sales declining by 8.4 percent, to $1.3 billion from $11.5 billion.