HILFIGER PAYCHECK REACHES $14 MILLION
Byline: Thomas J. Ryan
NEW YORK — With sales continuing to push ahead, Tommy Hilfiger’s pay last year hit the $14 million mark.
According to his firm’s just-released 10K, Hilfiger’s paycheck for the year ended March 1998 consisted of a salary of $10.5 million and a discretionary bonus of $3.5 million.
Under his employment agreement, Hilfiger, the honorary chairman and principal designer of Tommy Hilfiger Corp., receives an annual base salary of $900,000, subject to adjustments, plus 1.5 percent of sales exceeding $48.3 million.
Revenues reached $847.1 million last year against $661.7 million, a 28 percent gain. Sales were $784 million against $628.6 million; royalties jumped to $63.1 million from $33.1 million.
In the prior year, Hilfiger’s paycheck totaled $13 million, consisting of an $8.5 million salary and a $4.5 million discretionary bonus.
Joel Horowitz, the firm’s chief executive and president, earned $9.9 million against $7.6 million, a 30.3 percent raise. His pay hike reflects an increase in his bonus to $9.3 million from $7.2 million. Under his contract, Horowitz receives a cash award of 5 percent of the firm’s operating earnings. The firm’s net earnings last year grew 31 percent to $113.2 million, or $3.03 a share.
Among other executives, Silas K.F. Chou, chairman, earned $1.08 million last year, and Lawrence S. Stroll, director and ceo at Tommy Hilfiger Ltd., $950,000 — in each case, the same salary as the prior year. Chou and Stroll are the original backers of Hilfiger Corp.
As reported, Hilfiger, Horowitz, Chou and Stroll all received a bounty of cash and stock from the firm’s $1.15 billion acquisition of two of its sister companies — Pepe Jeans USA Inc. and Tommy Hilfiger Canada Inc. — completed in May. These businesses included the women’s wear, jeanswear and Canadian licensees.
The purchase price consisted of $756 million in cash and 9 million Hilfiger ordinary shares. Of the lump sum, Chou and Stroll received 35 percent each; Hilfiger, 22.5 percent, and Horowitz, 7.5 percent.
As a result of their previous Pepe ownership, Chou, Stroll, Hilfiger and Horowitz increased their combined stake in the parent company to 19 percent from less than 1 percent.
Hilfiger’s 10K also provided Hilfiger’s pro-forma results as if Pepe Jeans USA and Tommy Hilfiger Canada had been included in both fiscal 1998 and 1997 figures.
Earnings would have surged 106 percent to $116.2 million, or $2.48 a share, from $56.2 million, or $1.20. Sales advanced 40 percent to $1.27 billion from $908.4 million.
By division, pro-forma men’s wear wholesale sales would have been $706.4 million versus $579.8 million; women’s wear wholesale, $181.9 million versus $78.3 million, and children’s wear, $126.9 million against $73.9 million. Sales from company-owned stores would have been $196.1 million against $149.3 million, and royalties from licensing, $49.5 million against $27 million.
Hilfiger’s 10K also revealed that Federated Department Stores and Dillard’s each accounted for 22 percent of sales last year, and May Department Stores Co., 15 percent.
Advertising costs amounted to $21.8 million versus $19.7 million. These figures exclude amounts spent by licensees.