Most Recent Articles In People
Latest People Articles
- Grace Potter Branches Out With ‘Midnight’
- Millicent Rogers: Fashion Icon and Mistress of Reinvention
- Lynne Greene, Louise Camuto to Be Honored at Dramatists Guild Fund Gala
More Articles By
Retail executives continued to be rewarded handsomely for their efforts in 2007, but, like the numbers popping up for the rest of the economy, their compensation stumbled a bit.
This story first appeared in the July 24, 2008 issue of WWD. Subscribe Today.
In fiscal 2007, the 10 highest-paid retail executives made a collective $143.98 million, a number that, while high, represents a collective decline of $54.3 million, or 27.4 percent, from fiscal 2006 — when the 10 highest-paid retail executives made a combined $198.3 million.
There were an equal number of increases and decreases among the executives, with gains averaging $2 million to $4 million and the declines about the same. But retailers aren’t the only executives to suffer: According to reports from Forbes, chief executive officers among most of the country’s 500 biggest companies took an average pay cut of 15 percent last year.
Those retailers seeing the biggest drops in compensation in 2007 included Target’s Robert J. Ulrich, who, in his final year as ceo, saw his total pay package drop by $24 million to $12.2 million, and Abercrombie & Fitch ceo Michael Jeffries, who witnessed a drop of $14.7 million to $11.4 million. Ulrich, who was at the top of the retail compensation list in 2006, now rests at number six. Ulrich retired as ceo May 1, but remains Target’s chairman.
Why did Target’s and Abercrombie’s top executives experience such big pay cuts? Jeffries’ loss may be a result of his company having had outstanding results in the past, noted Terre Simpson, founder of New York-based executive search firm Simpson Associates. “Because retailers’ financial results have been a little rocky, executives are being assessed against such successful results in the past,” she said. A big part of Jeffries’ year-over-year decrease also came from option awards, which fell dramatically to $9,543 from $8.4 million. Jeffries also saw slower growth in the area of pension and deferred compensation, which added $1.5 million to his compensation in 2007, down from $6.7 million a year earlier.
While the Columbus, Ohio-based retailer’s stock is down 23 percent so far this year, 2007 financial results were strong. For the year, Abercrombie & Fitch’s net income reached $475.7 million, or $5.20 a share, versus $422.2 million, or $4.59, the previous year. Sales grew 13 percent to $3.75 billion from $3.32 billion. The company is also preparing to open its second-largest European flagship in Copenhagen and has plans to open stores in other European locales.
Overall, “retail stocks have been hit very hard this year, and pay packages are typically based on stock and incentives,” agreed Elaine Hughes, president of E.A. Hughes, another executive search firm based in New York. And, as gas and food prices soar and job cuts have intensified, consumers are opting for necessity shopping over frivolous spending, a shift that Wal-Mart — Target’s greatest competitor — can cater to with its cheaper price tags.
Lena Michaud, a spokeswoman for Target, said Ulrich “received less because company performance did not achieve those preapproved goals set by the board.” Because one of those goals was related to the size of a non-equity incentive plan and other compensation components, Ulrich saw a smaller pay package last year.
Replacing Ulrich in the number-one spot is H. Lee Scott, president and ceo of Wal-Mart Stores, who brought home roughly $15 million more than any other executive on the list. Scott received nearly $30 million in stock and option awards and incentive plans, bringing his total compensation to $31.6 million.
Other notable jumps in compensation came from Aéropostale ceo Julian Geiger, who broke into the top 10 at number nine, with a $3.5 million increase in compensation to $9 million. And the 10th highest-paid executive, the former president and ceo of Sears Holdings Corp., and now the ceo of Potbelly Sandwich Works, Aylwin B. Lewis, took in roughly $4 million more than in the prior year.