The first year of a new three-year employment contract produced a more than 60 percent increase in the total compensation for Guess Inc. chief executive officer Paul Marciano despite a reduction in the cash component of his pay package.

This story first appeared in the May 29, 2014 issue of WWD. Subscribe Today.

According to the definitive proxy filed by Guess with the Securities and Exchange Commission on Wednesday, Marciano’s total compensation came to $14.1 million, 60.7 percent above the $8.8 million reported for 2012.

The increase came from a quintupling of Marciano’s stock and option awards for the year, the sum of which came to $9.6 million, versus $1.9 million in 2012. His stock awards alone increased to $9.2 million from $1.4 million. As required by the SEC, awards are reported at grant date fair value for the year in which they are given. Because of vesting schedules and fluctuating stock prices, the amounts ultimately received by the executives may be considerably less. Marciano receives awards based on the profitability of Guess’ licensing business in addition to those tied to overall corporate performance.

The cash component of Marciano’s salary declined by slightly more than a third to $4.5 million from $6.9 million in the prior year. The new contract provided for a 50 percent raise in his salary, to $1.5 million from the $1 million he received in the eight previous years. His cash bonus — non-equity incentive plan compensation in the parlance of the proxy — fell by more than half, to $2.8 million from $5.7 million. Other compensation rose by a third to $228,000, with more than half, $131,000, tied to home security expenses.

The compensation committee of Guess’ board recognized progress in global expansion and e-commerce penetration as well as management’s “commitment to protect the Guess brand” in a highly promotional environment. “However, despite these accomplishments and strong management team performance in many areas, the compensation committee recognized that the company did not achieve its original financial expectations” for the year, the proxy said.

For the full year, net income declined 14.2 percent to $153.4 million, or $1.80 a diluted share, on a 3.3 percent fall in revenues, to $2.57 billion.

Maurice Marciano, cofounder and non-executive chairman, retired in 2012. He receives a $500,000 annual consulting fee under an agreement that has been extended until Jan. 28, 2015.

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