Ralph Lauren backed up a 25.7 percent increase in compensation last year with an $857.1 million payday for the conversion and sales of some of his Class B voting shares last month.
This story first appeared in the July 2, 2010 issue of WWD. Subscribe Today.
Lauren’s reported compensation as chairman and chief executive officer of Polo Ralph Lauren Corp. rose to $27.7 million in fiscal 2010 from $22 million in 2009, but still fell nearly $3 million short of the $30.6 million he earned in 2008.
And the conversion of a portion of his Class B shares and their subsequent sale to the public and firm resulted in an $857.1 million windfall, Polo officials told WWD. Adjusting for brokers’ fees, 9 million shares were sold to the public at about $78 each and 950,000 shares were provided to the underwriters to cover overallotments for the same amount. Additionally, Lauren sold 1 million shares to the firm that bears his name at the established price of $81 each.
Lauren’s pay package was revealed in the definitive proxy filed by Polo with the Securities and Exchange Commission Thursday. His salary was unchanged at $1.25 million, but his nonequity incentive plan compensation rose 40.4 percent to $19.5 million from $13.9 million in 2009, accounting for the bulk of his increase.
Other compensation rose 69 percent to $676,000, including $558,000 for reimbursement of personal travel.
The sum of Lauren’s stock and option awards fell 3.5 percent to $6.3 million from $6.5 million. Because of vesting schedules and fluctuating stock prices, these awards aren’t necessarily realized by the executives, but companies are required to report them at grant date fair value to the SEC.
Stripping out the noncash awards component, Lauren earned $21.4 million this year, 37.9 percent higher than in 2009.
Lauren, whose net worth was estimated at $4.6 billion by Forbes magazine prior to the stock sale, is listed in the proxy as the owner of 2.1 percent of the company’s Class A common stock and 91 percent of its Class B voting stock. The Lauren family owns all of the voting stock, although the number of Class B shares was reduced as a result of the recent stock offering.
In the proxy, Roger Farah, president and chief operating officer, was reported to have earned $19.3 million last year, about six times the $3.3 million reported for the prior year. Farah collected $9.9 million in nonequity incentive plan compensation, versus $2.2 million in 2009, and he received stock and option awards totaling $8.4 million, versus none in the prior year.