Avon Products Inc. had an expensive transition in power last year as it brought in Sheri McCoy as chief executive officer to succeed Andrea Jung.
Beginning her tenure on April 23 after 30 years with Johnson & Johnson, McCoy earned a total of $12.9 million, including a prorated $832,000 of her annual salary of $1.2 million, and a $1.9 million sign-on bonus to take the job, as stipulated in her offer letter from Avon.
The largest part of McCoy’s total compensation came in the form of stock awards, with a grant date fair value of $9.4 million. Of this amount, about $4.3 million was to compensate the new ceo for “forfeiting a significant amount of value in unvested equity and other benefits” resulting from her departure from J&J.
Additionally, McCoy received $591,000 as a cash bonus — nonequity incentive plan compensation — for her achievements during her stay at Avon in 2012, including initial actions on the company’s turnaround and expense reduction program. These details came to light as Avon disclosed its definite proxy to the Securities and Exchange Commission late Tuesday.
Jung, who relinquished the title of ceo upon McCoy’s arrival and stepped down as chairman at the end of the calendar year, earned $6.4 million from Avon last year, including $1.1 million in salary and $5.1 million in stock awards. Her annual salary was reduced to $1 million from $1.4 million when she relinquished the job of ceo.
Because of vesting schedules and fluctuating stock prices, stock and option awards aren’t necessarily realized by the executives to whom they are attributed, but are reported to the SEC at grant date fair value.
Avon last year posted a loss of $42.5 million, versus a profit of $513.6 million in 2011, as revenues dipped 5.1 percent to $10.72 billion. While it won’t face enforcement action from the SEC based on its contact with security analysts, the agency continues to investigate allegations that it bribed government officials in China.