NEW YORK — J. Crew Group Inc. will pay Millard “Mickey” Drexler cash compensation of up to $700,000 a year, plus various options and awards, according to filings released by the Securities and Exchange Commission on Monday.
This story first appeared in the February 4, 2003 issue of WWD. Subscribe Today.
The $700,000 includes base salary, bonuses and expense reimbursement, while the options come in different volumes and strike prices. Drexler has an option to buy 557,926 shares at an exercise price of $6.82 a share, an option to purchase 836,889 shares at a strike price of $25 and an option to buy 836,889 shares at $35. Additionally, Drexler will receive 725,303 restricted stock awards, subject to various vesting schedules, and another 55,793 shares as fully vested restricted stock.
On Thursday, J. Crew named the former Gap chief executive officer as its chairman and ceo, succeeding as ceo his former Gap colleague Ken Pilot, who had been in the job for only five months. Emily Woods, who remains on the board, had been chairman.
As part of his arrival, Drexler bought a 3 percent stake in J. Crew for $10 million and likely got a low entry price so there’s more incentive for him to take the company public. He also could lure other investors, thereby reducing Texas Pacific Group’s majority stake.
TPG hopes Drexler can sharpen J. Crew’s image, maximize its brand potential, and, eventually, allow it to cash out of its flagging investment. TPG bought J. Crew in 1997 for $560 million and intended to take the company public in spring 2001, but backed off after the market turned volatile and Crew’s performance weakened. Reportedly, TPG has also tried to sell J. Crew and approached several potential buyers. According to one source, “a few years ago, TPG could have doubled its money, but they probably thought they could get more.”
Now, the company that was worth almost $1 billion six years ago when TPG bought it is worth less than half that, brought down by a revolving door of ceos and senior managers who were brought in to turn around the operation.
Drexler was ousted at Gap last fall, after years of eroding sales and declining market share, and was replaced by former Walt Disney Co. executive Paul Pressler. About the same time, the chain began to show a sales rebound as a result of a return to basic and classic styles, largely due to Drexler’s final fall push. He still commands credibility in the marketplace as a talented merchant, despite struggling for years to turn around Gap.
In the same filing, president Jeffrey Pfeifle will receive an annual base salary of $760,000, an annual bonus of up to 100 percent of the base salary based on certain achievement objectives, and a long-term cash incentive of between $800,000 and $1.2 million. Pfeifle’s contract also provides for a one-time signing bonus of $2 million. Subject to certain stockholder approvals, he also will receive an option to purchase 167,378 shares at an exercise price of $6.82 a share, an option to buy 111,585 shares at $25 a share and an option to purchase 111,585 shares at a strike price of $35. He will also receive 111,585 restricted shares, subject to various vesting schedules.