3 Ways Personal Finances Change for Walmart Officers: Taxes, DCMP and Performance Shares
- Mark Chisenhall, CFA
- Feb 13
- 4 min read
Updated: Oct 21
In terms of complexity, the Officer level is an inflection point as managing your Taxes, Equity Compensation and Walmart Deferred Compensation Matching Plan (DCMP) becomes more orchestrated and important to meeting your financial goals.
Here are the 3 biggest changes plus a few financial planning tips for each.
1.) More Money, More Taxes for Walmart Officers
Many new officers are shocked by their first post-promotion tax bill. A $75K - $100K tax bill in April is common. Why is this the case?
Marginal Tax Rate: Most, if not all, of the additional income you earn will be taxed at 37% at the Federal level. While painful for some, this is not the reason for the large tax liability.
Under-Withholding on MIP and Equity: The reason is that Walmart (like most employers) withholds taxes on your MIP and Equity Compensation at 22% by default.
That is a 15% variance. So, if you earn $500,000 between MIP and PSUs, you've already under-withheld by $75,000.
What can you do?
Increase Withholding Rate on your Equity Compensation through Fidelity NetBenefits.
Make Quarterly Payments to the IRS to minimize the April payment and avoid under-withholding penalties.
Defer Taxable Income via the Walmart 401(k), Deferred Compensation Plan and HSA
If you opt to increase the withholding rate, be sure to calculate your marginal tax rate. While you can increase it up to 37%, that may be too high especially if you are deferring a significant amount via the DCMP.
Here are a few articles discussing taxes that you may find helpful:
2.) Now Things are Getting Serious with the Walmart DCMP
At the Officer level, you can defer up to 80% of Salary and 100% of MIP into the Walmart DCMP - up from just 80% of MIP for Sr. Directors.
How Can the DCMP Help with Taxes and Saving?
Less Taxable Income: Income deferred is not taxed in the current year, but will be taxed in the year you take withdrawals.
Lower Tax Rate: If planned correctly, these withdrawals occur when you are in a lower tax bracket (e.g. retirement, second career.)
Match: Walmart Matches up to 6% on eligible income which determined by the IRS.
For newly promoted VPs, it's important to remember that the elections you make in December 2025 impact your salary paid in 2026 and the MIP that pays out in 2027 (though earned in 2026).
For a more in-depth explanation of the Walmart DCMP, I have a few (too many) posts that go into more detail. Here are a few but there are several on the TFP site:
3.) Oh, Hi Performance Shares, Nice to Meet You
Alongside RSUs, new Officers now receive Performance Share Units (PSUs). Here's how PSUs differ:
Cliff Vesting: PSUs typically have a 3-year vesting period. In contrast to RSUs, 100% of the award vests at the end of the 3-year vesting period.
Variable Payout: The number of PSUs you receive is determined by a set of performance metrics. The award has a target payout, but the actual payout may differ based on performance.
Special Grants: Newly promoted officers receive a special grant that vests in Year 1 and Year 2 to bridge the gap until the first 3-year vesting period is completed.
Two things on managing PSUs:
PSUs will quicky accumulate into a large Walmart stock position. If that's not your intention, it's important to have a clear plan for diversifying as shares vest.
The additional income from PSUs may also free up capacity to defer more salary and MIP into the DCMP - one of the best ways to reduce taxable income during these peak earning, high-tax years.
Here are a few articles on Walmart's Equity Compensation Plans and managing highly appreciated company stock positions:
Key Takeaway
None of these issues are overly complicated on their own, but the novelty and number of them can create confusion. While the tax bill usually grabs the most attention, the most value often comes from taking advantage of the DCMP and having a thoughtful investment plan for the PSUs.
I offer financial planning to Executives for a flat-fee. I don't sell products or even require that I manage your investments directly. If you are interested in learning more about my financial planning approach and Services & Pricing, you can learn more here.
Thanks for reading,
Mark Chisenhall, CFA, MBA
Financial Advisor | Founder of Taurus Financial Planning
Mark Chisenhall, CFA is the founder of Taurus Financial Planning, a Fee-Only Wealth Management firm based in Bentonville, AR. The firm offers comprehensive financial planning, tax planning and investment management to corporate executives across the country.
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