By  on August 2, 2007

Ralph Lauren is tops once again.

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.Executives from Phillips-Van Heusen Corp. and Timberland Co. also placed in the top 10.

Emanuel Chirico, ceo at Phillips-Van Heusen, and Mark Weber, former ceo, received compensation packages of $6.7 million and $5.1 million, respectively.

Weber, who stepped down from PVH in February 2006, is entitled to severance equal to three times his average cash compensation, which includes his base salary and bonus for the 2004-05 reporting season.

Even though Timberland posted a 35 percent decline in full-year earnings, Kenneth P. Pucker, executive vice president and chief operating officer, and Jeffrey B. Swartz, president and ceo, still received hefty pay packages.

Pucker earned a total compensation of $6 million, which included a base salary of $536,250, while Swartz received $5.6 million, with a base salary of $818,750. Neither received a bonus.

In February, Timberland announced that Pucker would "transition" from the company effective March 31.

Earnings at the footwear maker in 2006 fell to $106.4 million, or $1.67 a diluted share, from $164.6 million, or $2.43, in the year prior.

Cherokee chairman and ceo Robert Margolis received an $8 million bonus after the company reported a 90 percent surge in full-year earnings. The bonus is on top of a base salary of $737,000.

In 2006, income at Cherokee soared to $34.8 million, or $3.93 a diluted share, from $18.3 million, or $2.07, in 2005.

Noticeably missing from the list were executives from Nike, Coach and Quiksilver. Those companies had not filed their executives' compensation packages as of press time. Last year, each company had executives on the top 10 list.

There is no direct comparison between executive compensation in 2006 and 2005 given new Securities and Exchange Commission rules on how companies report their executive pay packages. For the first time, stock and options awards are required to be reported in dollar amounts as part of the filing changes mandated by the SEC.

Still, similarly to retailers, stock and options awards made up the bulk of the compensation packages for executives at vendor firms, totaling $39 million for the top 10. However, this paled against retail executives, who reaped stock and options awards worth $124.8 million.The SEC now requires all companies to file compensation packages in a "plain language" format. The goal is to change how companies decide executive compensation, making packages more performance-based with less guaranteed pay.

The new format forces companies to reveal how they determine salaries, supply a fleshed-out description of their perks, provide stock and option awards in a dollar amount and outline goals set for executives.

The SEC, however, is not requiring companies to recalculate prior years' pay packages in the new format. As a result, the 2006 pay packages are not comparable with those from 2005. 

For the top 10 vendor executives and details of their compensation packages, click here.

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