NEW YORK -- Some top apparel executives scored huge earnings increases in 1993, but at underperforming companies, pay cuts were steep.
At the high end of the spectrum, Kellwood's William J. McKenna's pay more than tripled to $3.4 million, while at the other end Beeba's Creations' Arjun C. Waney's compensation plummeted 89.5 percent to $104,170. In a survey of 33 companies and their highest-paid executives, winners apparently balanced out losers and the average was just about flat, while average profits of their employers increased 15.7 percent. Executives at 20 firms got pay increases, three received the same compensation as a year earlier and 10 took cuts. Those whose salaries were slashed included Starter Corp.'s David A. Beckerman, down 56.1 percent; Fruit of the Loom's William Farley, down 42.9 percent; Danskin's Byron A. Hero, down 43.3 percent; Body Drama's Cecelia Post, down 23.4 percent (Post left Body Drama early this year), and Genesco's William S. Wire, down 34.9 percent.
In general, these cuts were related to poor or below-target performance by their respective companies. Warnaco's Linda J. Wachner took a 25.3 percent pay cut but still made it into the top five highest-paid apparel executives. Moreover, Wachner adds to her take by heading Authentic Fitness Corp., which was formed in 1990 and acquired Warnaco's activewear business.
Other winners include Robert Haas of Levi Strauss & Co., Tommy Hilfiger of Tommy Hilfiger Corp. and Sanford Greenberg, of Norton McNaughton. All executives cited in this story and accompanying chart are chief executive officers, except for Hilfiger, the designer who now is honorary chairman of the company that he founded; Wire of Genesco, who is its chairman; Waney, chairman of Beeba's Creations, and Post of Body Drama.
McKenna reached the top of the heap with a $2.4 million deferred compensation payment on top of his base salary of $700,000 and bonus of $350,000 in the fiscal year ended April 30, 1993. He also received $320,837 in restricted stock awards. Kellwood's earnings for fiscal 1993 increased 25.6 percent to $28.7 million, and McKenna's compensation equaled roughly 12 percent of that total. Levi's Haas won increases in salary and bonus because the company beat its business plan and debt paydown goals. Haas was paid $1.1 million in salary, a $1 million incentive bonus and a $152,795 cash bonus. He was also granted 11,800 long-term performance units, potentially worth $1.2 million in three years provided the company achieves its earnings target. Haas, a member of the family that founded Levi Strauss, owns 3.8 million shares, or a 7.98 percent stake.Starter's Beckerman received a salary of $687,500, a $1.8 million bonus and no stock options. Profits at the company were up 10.9 percent to $26.4 million. A year ago, Beckerman's bonus was $5.1 million.
In April 1993, when the company went public, Beckerman's contract was amended, providing for a base salary of $750,000 plus generous bonus provisions based on performance.
Beckerman owns 58.9 percent of the shares outstanding, or 15.5 million shares worth about $197.6 million at Tuesday's closing price.
At Warnaco, Wachner's salary was $2.4 million. She received no bonus but she did get stock options for a total of 700,000 shares of stock. One option was on 200,000 shares at an exercise price of $36.25 a share, and the other for 500,000 shares at $31.63. Wachner currently owns 13.8 percent of shares outstanding, or 3 million shares worth about $96.8 million. Warnaco's stock closed Tuesday at $32.25.
For her work at Authentic Fitness during the fiscal year ended July 3, 1993, Wachner's compensation was $675,000, plus options for 50,000 shares at $16 a share. A year ago, she received no salary but pulled in a $1.7 million sign-on payment for fiscal 1991 and 1992 and received $2.3 million in the termination of a 1990 incentive plan. Wachner has 909,897 shares in the company, or a 10.5 percent stake. In the 1994 fiscal year, Wachner is receiving a $2.5 million bonus related to Authentic's acquisition of the Cole/Catalina swimwear business, and an $800,000 bonus for revising her contract.
Hilfiger, as director and vice chairman of his company, has an agreement that closely ties his compensation to net sales. Under his contract, Hilfiger receives an annual base salary of $900,000 and 1.5 percent of sales above $48.3 million. Based on sales of $138.6 million for the year ended March 31, 1993, when he was vice chairman of the company, he earned a bonus of $1.4 million.
Others hitting above $1 million in 1993 compensation were Fruit of the Loom's Farley, Salant Corp.'s Nicholas DiPaolo, Liz Claiborne's Jerome A. Chazen and VF's Lawrence R. Pugh. Farley came in just behind Hilfiger in the survey, but took a 42.9 percent pay cut to $2 million. He was paid $850,000, and received a bonus of $1.2 million, $1.9 million lower than a year ago because of the decline of FTC's stock price and earnings growth. At VF, which was plagued by problems at its Vanity Fair and Girbaud divisions in 1993, L.R. Pugh's compensation was slashed 29.3 percent to $1.2 million, a scant 0.5 percent of the company's earnings, the smallest percentage in the group. The decline reflects a decrease in bonus from $900,000 last year to $400,000 in 1993, because the company achieved only 90 percent of its earnings target.Salant's emergence from Chapter 11 last July resulted in a $600,000 bonus for Nicholas DiPaolo on top of his salary of $525,000. He also received a $262,500 bonus based on the achievement of a performance target. Some ceos received compensation increases despite poor performance or losses, but the increases were small. Liz Claiborne's Chazen was paid a salary of $574,000, and an additional $629,961, mainly from deferred compensation. The Claiborne proxy statement points out that because of his significant stock holdings, Chazen does not receive options. He owns 2.3 million shares, or a 3 percent stake, worth about $50.3 million. Because of the poor results in 1993, Chazen asked not to be considered for a bonus. Josephine Chaus was paid $392,000 in 1993, a 5 percent increase from her pay the previous year. In the most recent quarter, Chaus injected $3 million in credit into the money-losing company. Jones Apparel, Norton McNaughton, St. John Knits and Quiksilver each had a strong year, and executive pay reflected earnings gains. St. John's Gray was paid $943,988, up from $644,501 a year earlier, and his base salary will increase to $975,000 in 1994, under a new three-year agreement. Although St. John does not give bonuses, Gray was awarded options for 160,000 shares at $17 a share. St. John's stock was trading at $28.6, as of Tuesday.
Jones's Sidney Kimmel owns 7.8 million shares, or a 30 percent stake, of the company. He was paid $750,000 plus a $150,000 bonus. In February, Kimmel raised about $80 million from the sale of 2.7 million Jones shares in a secondary offering. Norton McNaughton's ceo, Sanford Greenberg, was paid $572,000 plus a $733,333 bonus. His compensation was a whopping 39.2 percent of earnings. Following an initial public offering in February, Greenberg's stake declined to 10.1 percent because of the additional shares outstanding. His stake of 795,450 shares is worth roughly $14.2 million.
Quiksilver's profits soared to $4.4 million from $371,000, and Robert McKnight Jr. received a $272,000 bonus and options for 30,000 shares at $9 a share. The stock is currently trading at $13.75 a share.
At United Merchants & Manufacturers, losses totaled $29.7 million, but Uzi Ruskin continued to draw a $500,000 salary.Likewise, John J. Pomerantz of The Leslie Fay Cos., which has been operating in Chapter 11 proceedings since April of 1993, received $798,915, which is his annual salary under contract until 1997.
Pomerantz also received options for 25,000 shares at $12.50 a share.
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