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NEW YORK — It’s a changing of the guard at Ralph Lauren Corp.
This story first appeared in the September 19, 2013 issue of WWD. Subscribe Today.
On Wednesday, the fashion house elevated Jackwyn Nemerov to president and chief operating officer, succeeding Roger Farah. He becomes executive vice chairman.
In addition, Lauren has created an Office of the Chairman, led by Ralph Lauren, 73, chairman and chief executive officer, and including Farah, 60; Nemerov, 62, and Christopher Peterson, 47, currently senior vice president and chief financial officer, who was named executive vice president and chief administrative officer, in addition to cfo.
The Office of the Chairman’s purpose is to enhance the company’s ability to support the growth of the business in an increasingly complex global environment and capitalize on new business opportunities. Farah, Nemerov and Peterson will report directly to Lauren. Previously, Nemerov and Peterson reported to Farah, who reported to Lauren. The changes will be effective Nov. 1.
In his new role, Farah will devote 50 percent of his time to the Lauren business. “Primarily, he’s been working all the time and now he will have more time for himself,” said Ralph Lauren in an exclusive interview at his offices. “He’ll work as my partner on all new projects, advising the team.”
Lauren said the company has grown into a global firm, doing business in 80 countries, and there are a lot of opportunities that cross his desk. “As a public company, we had to figure out a new strategy. It’s a team, and I always work well with teams. We’re too busy with everyday things to capitalize on everything,” said Lauren, expecting the new structure will allow them to do so. He said Farah will focus on strategy and new concepts and will do a lot of traveling.
“Over the last 13 years, he has been very successful and a great partner,” said Lauren. “Roger has played a critical role in driving the company forward and has presided over an unprecedented era of growth and accomplishment. His leadership, strategic guidance and friendship have been invaluable to me and the entire company, and his impact on the company has been extraordinary.”
During Farah’s tenure, Lauren’s volume grew from $2 billion to $7 billion last year. The stock traded at $17 when Farah joined in 2000, and on Wednesday, it closed at $168.12, up $1.44 from Tuesday’s close.
“Roger’s transition to executive vice chairman will allow him to focus more specifically on business development and strategic initiatives while Jacki and Chris work with me to run the day-to-day business,” said Lauren.
Under the new regime, Nemerov will be responsible for global merchandising, manufacturing and supply chain operations, as well as the company’s retail, wholesale and licensing businesses worldwide. Most recently, she was executive vice president of wholesale apparel, home, accessories and footwear, product licensing, merchandising, global sourcing and supply chain, and was responsible for the management of all men’s, women’s and children’s wholesale brands, licensed apparel and accessories and manufacturing. She joined the company in 2004 and has been a member of the board since 2007. Earlier, she served in various executive posts at Jones Apparel Group for 17 years, including president and coo.
Lauren said he’s known Nemerov since her days at Jones when she originally built the Lauren Ralph Lauren business. At his company, she’s been instrumental in building the Lauren and Ralph Lauren businesses. “She’s very smart and well-rounded,” he said.
Peterson, who joined Lauren as senior vice president and cfo in September 2012, spent 20 years at Procter & Gamble Co. in several senior corporate and operational roles. Most recently, he was cfo of P&G’s Global Household Care division.
In his new role, Peterson will oversee legal, corporate facilities, global real estate and corporate services, and will continue in his role as cfo to lead the global finance and information technology organizations, including financial planning and analysis, accounting, tax, treasury and investor relations.
“This is the right team to take this company forward and the right time to be making these changes,” said Lauren. “I chose Jacki and Chris to work alongside me because their outstanding leadership skills, unrelenting focus on performance and broad, global experience will improve our ability to take advantage of the tremendous opportunities ahead.
“Jacki is a deeply experienced merchant and business leader, with profound knowledge of all facets of this company and brand. Chris is a world-class executive who has impressed me immensely with his ability to rapidly assimilate into Ralph Lauren and command the respect of the organization. They will work with Roger and me to shape the future of the company,” added Lauren.
Going forward, Lauren said that Nemerov and Peterson will be on the company’s financial results calls with Wall Street analysts. Farah previously handled that responsibility.
As for where his son, David Lauren, executive vice president of advertising, marketing and corporate communications, fits into the hierarchy, Lauren said, “He’s learning. He might be in there [the Office of the Chairman] at a future date. I plan to build the Office of the Chairman.” The younger Lauren was named to the board in August, bringing the number of board members to 13. Nemerov and Farah are also on the board; Peterson is not.
In June 2012, Ralph Lauren signed a five-year employment contract that will keep him at the helm of the company he founded until April 1, 2017, the end of the firm’s 2017 fiscal year.
Lauren said the moves are all positive and “there are no emergencies here. Roger and I have always worked together, and he’s done the Wall Street thing. Now we have Chris to do the day-to-day operations, and Roger can work with me on new things.” For example, he said the company is opening a Manhattan restaurant at 711 Fifth Avenue, which adds to the other restaurants the designer operates in Paris and Chicago.
Farah has been one of the most respected and highest paid executives in the fashion industry. Last year, he saw his total pay fall 8.7 percent to $17.8 million. Compensation for Nemerov dipped 2.5 percent to $11.8 million.
In a filing with the Securities and Exchange Commission on Wednesday, the company noted that in Farah’s new post as vice chairman, he will be required to devote about 50 percent of his working time and efforts to the business and affairs of the firm. He will receive an annual base salary of not less than $450,000, and will participate in the executive officer annual incentive plan. His annual bonus could range from a threshold of $1.5 million to a maximum of $4.5 million, with a target of $3 million.
Nemerov will receive an annual base salary of not less than $1 million, and she will also be entitled to participate in the bonus program. Beginning in fiscal year 2015, she has an annual target bonus opportunity of 300 percent of her base salary and a maximum bonus opportunity of 450 percent of her base salary. For fiscal year 2014, her annual target bonus opportunity is $2.3 million and a maximum bonus opportunity of $3.45 million.
Peterson will receive an annual base salary of not less than $900,000, and he will also be entitled to participate in the bonus program. Beginning in fiscal year 2015, he has an annual target bonus opportunity of 200 percent of his base salary, and a maximum bonus opportunity of 300 percent of his base salary, in addition to other equity awards.
Lauren wanted to make clear that Farah will still be very involved. “This is not a puffed-up idea. It’s a plan we wanted to have,” said Lauren. “It’s a matter of how to focus our attention and bring in new people and add them to the spectrum.”
Prior to joining Lauren in 2000, Farah was chairman and ceo of Venator Group. Earlier he was president and coo of Macy’s and chairman and ceo of Federated Merchandising Services and Rich’s Department Stores.
Lauren went public in 1997, but stumbled and missed earnings estimates. The stock, which hit the market at $33, was stuck in the teens when Lauren hired Farah in 2000 to bolster the management of the publicly traded firm.
“I am extremely proud of this company and the incredible success it has achieved,” said Farah. “Shepherding the growth and development of Ralph Lauren has been an incredible professional accomplishment, and I am very excited about the opportunities that lie ahead.” He said Lauren “has made tremendous progress in recent years by expanding into new markets, growing our global luxury presence, improving our direct-to-consumer reach and innovating new product categories, but there is more to do.
“This is the optimal structure to take the company through the next phase of growth and to support the global expansion of the brand,” said Farah.