The final year of his current employment contract paid off handsomely for Ralph Lauren.
The 68-year-old founder, chairman and chief executive officer of Polo Ralph Lauren Corp. topped WWD’s list of highest paid vendors for the fourth year in a row with total compensation of $34.2 million, up 32 percent, or roughly $8.3 million, from his fiscal 2007 pay package.
But if the strong performance of Polo last year drove Lauren’s pay increase, it was a payoff that landed Peter Boneparth, former president and ceo of Jones Apparel Group Inc., in the second slot on the list. Boneparth, 48, stepped down from the top spot at Jones in July 2007, seven months into the company’s fiscal year, but earned total compensation of $16.9 million, of which $16.7 million was attributable to severance payments and the early vesting of restricted stock awards, according to the firm’s definitive proxy statement. Termination payments — defined as “salary, bonus and benefits for the period subsequent to the termination of employment” — accounted for $11.2 million of Boneparth’s total.
Roger Farah, 55, president and chief operating officer of Polo, took the third spot on the vendor pay list with compensation of $15.7 million, more than $3 million above last year’s tally.
The bulk of Lauren’s increase came from stock and option awards, up $12.5 million to $20.7 million last year from $8.2 million the year before. He was reimbursed $1 million for use of his personal aircraft by executives of the company. As in the prior year, Lauren received no bonus.
As reported, the terms of Lauren’s compensation under his new contract have changed, even as his base salary has been lifted to $1.25 million from $1 million. To put his compensation arrangements more in line with other members of Polo’s senior management, starting this year he will be entitled to a bonus only if 80 percent, rather than 50 percent, of the company performance target has been reached. Stock option grants have been reduced to 100,000 stock options from 150,000, and the term for stock options was reduced to seven years from 10 years. Restricted stock units were reduced to 75,000 from 100,000 and are now based on performance rather than time.
Last year, Polo’s net income increased 4.7 percent, to $419.9 million, or $3.99 a diluted share, while net revenues were up 13.6 percent to $4.88 billion.
Unlike the top 10 highest paid retailers, there were no declines in compensation among the vendor executives. All but one — Phillips-Van Heusen Corp.’s chief executive Emanuel Chirico, 52, whose pay package remained the same as last year at $6.7 million — saw gains in their total compensation. This year, the top 10 were paid a total of $123.3 million, up 39 percent, or $34.6 million, from the 10 highest paid vendors last year, who took in $88.7 million. This takes an opposite turn from the pay packages of the top 10 highest paid retailers, who experienced a collective compensation decline of $54.3 million.
“These are key vendors, these are the good vendors — the ones that are not performing are not on the list,” said Terre Simpson, president of Simpson Associates, a New York-based executive search firm. “In retail there’s a spread of the best and the worst. Obviously, not everybody is selling,” which explains why the highest paid retailers saw a decline in their pay packages.
“Ralph Lauren performs well, but not every vendor can say the same,” added Simpson. “He’s the premier American vendor. He’s number one because he does a lot of things right.”
Collectively, this year’s top 10 executives made $45.5 million more than last year’s assemblage. The gains ranged from $1.4 million for number 10-ranked Warnaco Group Inc. ceo Joseph Gromek, to a whopping $12.8 million for Boneparth, whose departure pushed him to number two after he missed the top 10 last year.
Boneparth’s employment at Jones ended on July 12, 2007, after it had been disclosed his employment wouldn’t be extended beyond the original March 31, 2009, expiration of his contract. Boneparth reportedly had clashed with Jones’ board over issues ranging from the sale of Barneys New York to the question of whether the company should be sold as a single entity or through a series of divestitures.
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