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Pay Day

<b>The 20 U.S. apparel executives at publicly listed companies with the highest compensation packages in 2002.<br><br>The average salary of WWD’s top 20 apparel executives in 2002 was $5.4 million, an increase of 295.5 percent over 2001....

The 20 U.S. apparel executives at publicly listed companies with the highest compensation packages in 2002.

The average salary of WWD’s top 20 apparel executives in 2002 was $5.4 million, an increase of 295.5 percent over 2001. Excluding Levi Strauss & Co. ceo Philip Marineau’s more than 4,000 percent raise, average compensation grew 77.4 percent. Not counting the top three earners (who tend to skew the results), average compensation was $2.9 million, which is more reflective of the sample. While the economic climate took a toll on the apparel industry, most executives were well-compensated for their efforts.

1
PHILIP MARINEAU,
ceo, Levi Strauss & Co.
2002 compensation: $24.9 million; change from 2001: 4440.8 percent; 2002 earnings: $25 million; 2002 revenues: $4.12 billion; Compensation as a percentage of earnings: 100
Nice work, if you can get it. The biggest boost in Marineau’s pay came from a $22.5 million payout from the company’s “leadership shares” program for meeting a performance target – a bonus by any other name – on top of his regular $1.3 million bonus and $1.2 million in salary. The jeans giant had its seventh consecutive year of sales declines last year, but saw sales growth for the third and fourth quarters.

2
TOMMY HILFIGER,
honorary chairman, Tommy Hilfiger Corp. (1)
2002 compensation: $22.4 million; change from 2001: -10.3 percent; 2002 loss: ($513 million); 2002 revenues: $1.89 billion; Compensation as a percentage of earnings: N/A
Amid declines in its men’s and women’s wholesale divisions and its retail operation, Tommy Hilfiger reported a net loss of $113.8 million due to special charges for the fourth quarter ended March 31. It was the final blow in what executives termed the company’s most difficult year.

3
JOEL HOROWITZ
, ceo, Tommy Hilfiger Corp. (1)
2002 compensation: $10.7 million; change from 2001: -15.8 percent; 2002 loss: ($513 million); 2002 revenues: $1.89 billion; Compensation as a percentage of earnings: N/A
Horowitz will remain as chairman but plans to leave the ceo post when his contract expires next year. Despite pressure from Wall Street to name a new ceo and make acquisitions, Tommy Hilfiger, honorary chairman, has said he doesn’t want to rush into any decisions.

4
RALPH LAUREN,
ceo, Polo Ralph Lauren (2)
2002 compensation: $4.5 million; change from 2001: -30.9 percent; 2002 earnings: $174.2 million; 2002 revenues: $2.44 billion; Compensation as a percentage of earnings: 2.6
Polo is rushing to produce a Lauren by Ralph Lauren collection for spring. In June, Jones Apparel Group gave up the license, which generated $548 million in sales for Jones last year. For the three months ended March 29, income at Polo Ralph Lauren jumped to $73.2 million, a 52.5 percent gain.

5
PETER BONEPARTH,
ceo, Jones Apparel Group
2002 compensation: $4.4 million; change from 2001: 379.5 percent; 2002 earnings: $318.5 million; 2002 revenues: $4.34 billion; Compensation as a percentage of earnings 1.4
Some industry observers have criticized Boneparth, who took no bonus in 2001, for his handling of the Ralph and Lauren licenses by Ralph Lauren. Jones relinquished the license last month and filed a $550 million lawsuit against Polo and Jackwyn Nemerov, former president of Jones. Boneparth, who did take a bonus in 2002, quickly moved forward on a Jones career casual collection.

6
ROBERT MARGOLIS,
ceo, Cherokee Inc. (3)
2002 compensation: $3.5 million; change from 2001: 8.5 percent; 2002 earnings: $13 million; 2002 revenues: $33.1 million; Compensation as a percentage of earnings: 26.8
Margolis’ bonus is pegged to certain performance targets, including earnings before interest, taxes, depreciation and amortization, which grew 6.7 percent last year. He credited the company’s success in 2002 to the launch of Cherokee-branded products at Tesco and the company’s relationships with Zellers, Carrefour and Target, which accounts for 65 percent of the firm’s top line. Cherokee capped its seven-year streak of rising sales and earnings with a gain in net income of 9.3 percent to $2.6 million in the fourth quarter.

7
KENNETH COLE,
ceo, Kenneth Cole Productions
2002 compensation: $3.2 million; change from 2001: 178.3 percent; 2002 earnings: $26.1 million; 2002 revenues: $433 million; Compensation as a percentage of earnings: 12.2
Kenneth Cole’s earnings rose 15.2 percent to $6.4 million and net sales increased 17 percent to $102.1 million for the three months ended March 31. The company had a stellar year, in which net income swelled 57.3 percent to $26.1 million versus a 56.7 percent plunge in the prior year, at which time Cole took a bonus of only $150,000.

8
BRUCE KLATSKY,
ceo, Phillips-Van Heusen Corp.
2002 compensation: $3.15 million; change from 2001: 215.3 percent; 2002 earnings: $30.4 million; 2002 revenues: $1.4 billion; Compensation as a percentage of earnings: 10.4
Klatsky, who took no bonus the previous year, saw his income and profile in the fashion industry rise with the acquisition of Calvin Klein Inc. But the costs of integrating Klein into the corporate fold contributed to a first-quarter loss for Phillips-Van Heusen Corp. Next year, PVH is looking for its new trophy brand to help drive double-digit earnings increases.

9
PAUL CHARRON,
ceo, Liz Claiborne Inc.
2002 compensation: $3.12 million; change from 2001: 46.1 percent; 2002 earnings: $231.2 million; 2002 revenues: $3.72 billion; Compensation as a percentage of earnings: 1.4
Charron’s bonus nearly doubled as the company reached certain earnings-based goals relating to earnings per share and return on invested capital. The Claiborne ceo has focused attention on the company’s strategic acquisitions, which include last year’s purchases of Ellen Tracy and Mexx Canada. He closed the company’s 22 Liz Claiborne freestanding stores, reserving Claiborne’s Fifth Avenue flagship for Mexx. The plan appears to be working: the company posted double-digit increases in first-quarter profits and sales.

10
PAUL FIREMAN,
ceo, Reebok International Ltd.
2002 compensation: $3.1 million; change from 2001: none; 2002 earnings: $126.5 million; 2002 revenues: $3.13 billion; Compensation as a percentage of earnings: 2.4
The fourth quarter was a slam dunk for Reebok, which tripled its income to $16.5 million. Yet Fireman said the company is “confident, but not cocky,” and for the “first time in 10 years, making it to the top of the mountain doesn’t seem so far out of reach.”

11
SIDNEY KIMMEL,
chairman, Jones Apparel Group
2002 compensation: $3 million; change from 2001: -18.9 percent; 2002 earnings: $318.5 million; 2002 revenues: $4.34 billion; Compensation as a percentage of earnings: 0.9
Kimmel’s soft touch may have been missing from the negotiating table over the Lauren by Ralph Lauren license, but the chairman of Jones Apparel Group stood by his man — handpicked successor Boneparth — and his handling of events. Besides, Kimmel, who founded the company in 1970, is said to be involved in all business decisions.

12
MOSSIMO GIANNULLI,
ceo, Mossimo Inc. (3)
2002 compensation: $2.79 million; change from 2001: -34 percent; 2002 earnings: $13.7 million; 2002 revenues: $19.9 million; Compensation as a percentage of earnings: 20.4
As Target’s fortunes go, so do Mossimo’s. Despite unrelenting price competition from Wal-Mart, Target’s pretax profits and sales increased in the fourth quarter. Meanwhile, annual sales of Mossimo products at Target rose to nearly $1 billion last year. The firm has extended its agreement with the discounter until Jan. 31, 2006.

13
PHILIP KNIGHT,
ceo, Nike Inc.
2002 compensation: $2.73 million; change from 2001: 39 percent; 2002 earnings: $663.3 million; 2002 revenues: $9.89 billion; Compensation as a percentage of earnings: 0.4
Nike’s contentious relationship with Foot Locker affected U.S. sales last year, but its international business was strong, particularly Asia Pacific, one of the firm’s fastest-growing regions. Europe remains one of Nike’s most consistent growth regions.

14
JAY MARGOLIS,
president, Reebok International Ltd.
2002 compensation: $2.7 million; change from 2001: 145.1 percent; 2002 earnings: $126.5 million; 2002 revenues: $3.13 billion; Compensation as a percentage of earnings: 2.1
Margolis’ bonus increased 258.6 percent in 2002. In addition to launching product extensions such as footwear, women’s wear and leisurewear for the NBA and NFL franchises, Reebok is rolling out Rbk by Diane Von Furstenberg, a collection the designer developed for tennis star Venus Williams.

15
MACKEY MCDONALD,
chairman, president and ceo, VF Corp.
2002 compensation: $2.4 million; change from 2001: 64.1 percent; 2002 loss: ($154.5 million); 2002 revenues: $5.08 billion; Compensation as a percentage of earnings: N/A
McDonald’s bonus increased 174.3 percent as VFC achieved certain performance goals based on the firm’s earnings per share, excluding the effects of extraordinary and one-time items. While VF lost out to PVH in its attempt to buy Calvin Klein Inc., it emerged victorious in the quest for Nautica. McDonald hopes Nautica will allow VF to better penetrate the department store channel of distribution and provide a springboard for growth in women’s sportswear.

16
JOHN IDOL,
ceo, Kasper A.S.L. Ltd.
2002 compensation: $2.39 million; change from 2001: 208.5 percent; 2002 earnings: $6.4 million; 2002 revenues: $358 million; Compensation as a percentage of earnings: 37.2
Idol joined the company in July 2001. As such, his prior-year compensation was prorated, resulting in the large increase. He has said he will resign if Kellwood Co.’s pending offer of $163 million to acquire Kasper, which is in bankruptcy protection, should prevail during a 30-day auction that will most likely begin at the end of the month. If another company — such as Jones Apparel Group — should prevail, Idol may decide to stick around rather than cash out under the terms of his contract.

17
HAL UPBIN,
ceo, Kellwood Co.
2002 compensation: $2.3 million; change from 2001: 86.8 percent; 2002 earnings: $42 million; 2002 revenues: $2.2 billion; Compensation as a percentage of earnings: 5.6
Last year, Kellwood’s women’s division posted operating earnings at 7.8 percent of sales. The company continues to play all the angles with products for a range of retail venues. Upcoming launches include an Izod women’s sportswear line; Lucy Pereda for Sears; David Meister sportswear for Neiman Marcus and Saks Fifth Avenue, and DLG for department stores.

18
EUGENE WARSAW,
ceo, Hampshire Designs, Hampshire Group
2002 compensation: $2.2 million; change from 2001: 54.4 percent; 2002 earnings: $17 million; 2002 revenues: $293.3 million; Compensation as a percentage of earnings: 13.1
Knitwear manufacturer Hampshire Group is known for its bread-and-butter labels which are neither overly flamboyant nor hip, but have the right combination of fashion and value to succeed at retail. The company acquired Requirements in September and purchased Item-Eyes Inc., a privately held sportswear firm, in 2000.

19
MARK WEBER,
chief operating officer, Phillips-Van Heusen Corp.
2002 compensation: $1.93 million; change from 2001: 140.8 percent; 2002 earnings: $30.4 million; 2002 revenues: $1.4 billion; Compensation as a percentage of earnings: 6.3
Weber, who took no bonus in the previous year, commented on the Klein business at PVH’s annual meeting, saying, “We keep looking for warts, and we haven’t found them yet.” PVH hopes to develop the Calvin Klein women’s better CK collection and its and men’s counterpart into businesses with sales of up to $1 billion each.

20
KENNETH WATCHMAKER,
cfo Reebok International Ltd.
2002 compensation: $1.8 million; change from 2001: 13.9 percent; 2002 earnings: $2.3 million; 2002 revenues: $3.13 billion; Compensation as a percentage of earnings: 1.4
Reebok is strengthening its presence at Foot Locker, eating into Nike’s former domain. NFL and NBA licensed lines were partly responsible for a strong performance last year, when income jumped 23.1 percent to $126.5 million from $102.7 million in 2001.