The chairman and chief executive officer of Polo Ralph Lauren Corp. ranked as the highest-paid executive of an American vendor in 2006, with a $25.9 million pay package. He topped the list for the third year in a row.
Polo dominated WWD's top 10 list of vendor executive compensation, with Roger N. Farah, the company's president and chief operating officer, occupying the number-two slot with a total pay package of $12.5 million. This included a base salary of $900,000 and stock and option awards worth more than $8.5 million.
The pay packages for Lauren and Farah stem from Polo's substantial growth over the last few years. The American fashion brand reported a 30 percent jump in full-year earnings last year, to $400.9 million, or $3.73 a diluted share, from $308 million, or $2.87 a share, in 2005.
In a year filled with changes and debate regarding how executive pay should be reported, the top 10 vendor executives received compensation packages totaling $88.8 million. But while in past years the vendor side was where the money was, 2006 proved to be an exception. As reported last week, the top 10 highest-compensated executives of American retailers earned a total of $198.7 million last year. The amount was boosted by stock options, with the list led by Robert Ulrich, chairman and ceo of Target Corp., whose compensation package totaled $36.4 million.
Even the executives in the second and third spots on this year's retailer list earned more than Lauren. H. Lee Scott Jr., president and ceo of Wal-Mart Stores Inc., received a total package of $29.7 million in 2006, while Michael S. Jeffries, chairman and ceo of Abercrombie & Fitch Co., received $26.2 million.
As for Farah — he wouldn't have even made the top 10 on the retailers' list, which contained R. Brad Martin, retired chairman of Saks Inc., in the 10th spot with a total compensation of $12.9 million.
Clearly the lists mirror the states of the two sides of the industry. Retail generally has been booming over the last few years at companies like Target, Abercrombie & Fitch, Guess and American Eagle Outfitters Inc. The vendor side, however — apart from a few firms like Polo — has been struggling with retail consolidation and growing competition from private label. Liz Claiborne Inc. on Tuesday reported a 65 percent drop in profits for the second quarter in a row, while Jones Apparel Group on Wednesday reported a loss of $47 million.
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