Glenn Murphy, chairman and chief executive officer of Gap Inc., saw his compensation fall nearly 6 percent in 2009, but he’ll more than make up the shortfall this year with a special bonus granted to him by the company’s compensation and management development committee.
In 2009, Murphy’s total pay fell 5.9 percent to $5 million from $5.4 million in 2008. The majority of the more than $300,000 decrease was attributable to a voluntary reduction in his salary, to $1.275 million from $1.5 million, as part of an overall cost-cutting effort undertaken because of difficult business conditions. His salary has reverted back to $1.5 million for 2010.
Also this year, Murphy will receive a one-time bonus of $635,000. According to the definitive proxy filed Tuesday with the Securities and Exchange Commission, the amount is in recognition not only of his 2009 salary reduction, but also of a financial performance last year that was “well above expectations, particularly in light of the severe economic downturn” and of “significant progress on strategic objectives over the course of the year.”
As in 2008, Murphy received no stock or option awards or bonus, but his nonequity incentive plan compensation increased 19.3 percent to $3.6 million from $3 million in the prior year. All other compensation fell 80.4 percent to $163,000 from $834,000 as his personal use of the company plane dropped to $92,000 from $211,000. The lion’s share of the 2008 figure was $477,000 in relocation expenses as the ceo and his family moved to California from their former home in Canada.
Murphy’s incentive plan compensation was based on the San Francisco-based firm’s earnings before interest and taxes last year, excluding certain nonrecurring items.
In the fiscal year ended in January, Gap’s net income grew 14 percent to $1.1 billion, its highest profit figure since fiscal 2005. Sales retreated 2.3 percent, to $14.2 billion from $14.53 billion. Although comparable-store sales were down 3 percent for the corporation, the Old Navy North America unit rebounded with a 3 percent gain versus a 17 percent decline in 2008. All other business units were down for the year, but in February, the first month of the new fiscal year, Old Navy was up 5 percent, Banana Republic up 6 percent and Gap flat.
Among the members of Gap’s compensation committee is Domenico De Sole, chairman of Tom Ford International and former president and ceo of Gucci Group. He’s been a Gap director since 2004.
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