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Cash bonuses for the top executives of The Warnaco Group Inc. last year declined from their 2010 levels as the firm failed to meet earnings targets.
This story first appeared in the April 12, 2012 issue of WWD. Subscribe Today.
Joe Gromek, who retired as president and chief executive officer of the firm on Feb. 1, was the only one of the five named executive officers covered in the company’s definitive proxy to register an increase in overall compensation last year, landing at $10 million, 22.9 percent above his 2010 pay package. His salary rose 4.4 percent to $1.2 million from $1.1 million, while his cash bonus, classified as “nonequity incentive plan compensation,” dropped 58.7 percent to $1.3 million from $3.2 million for the prior year.
Gromek’s stock and option awards doubled to $6.8 million, from $3.4 million, based on performance considerations that included years prior to 2011. Although recorded at “grant date fair value” to comply with Securities and Exchange Commission guidelines, these awards aren’t necessarily realized by the executives cited, because of fluctuating stock prices and vesting schedules.
Helen McCluskey, who succeeded Gromek as president and ceo after serving as chief operating officer last year, saw her overall compensation decline 38.9 percent to $3.9 million from $6.5 million in 2010. Her salary rose 5.6 percent to $900,000 from $852,000 in 2010, but her cash bonus fell 52.2 percent to $666,000 from $1.4 million. Additionally, the sum of her stock and option awards fell 45.3 percent to $2.2 million from $4.1 million.
The Warnaco proxy, filed with the SEC on Wednesday, said that McCluskey’s salary as ceo will be $1 million and that she’ll be eligible for an annual target bonus opportunity of $1.1 million, in addition to a supplemental award equal to 10 percent of her total cash compensation for the prior fiscal year.
Warnaco ended fiscal 2011 on a down note, as charges associated with the loss of the European ck Calvin Klein bridge line resulted in a $6.7 million loss on a 3.9 percent increase in revenue. That cut into its full-year earnings, which, on the basis of generally accepted accounting principles, tallied $3.01 a diluted share while revenues grew 9.5 percent to $2.51 billion. In its proxy, Warnaco noted that the company “did not meet its target for incentive compensation” and its executives were eligible for 74 percent of their established target bonuses. In the prior two years, Warnaco “exceeded maximum thresholds” for bonuses, and executives were compensated at peak levels.
Total compensation for Lawrence Rutkowski, executive vice president and chief financial officer, dropped 24.6 percent to $1.9 million, while sportswear group president Frank Tworecke saw his total pay drop 8.9 percent to $3.1 million. Dwight Meyer, president of global sourcing, distribution and logistics, earned $2.5 million, down 18.2 percent from 2010.