SHORT LIST FOR KARAN TOP SPOT
Byline: Lisa Lockwood
NEW YORK — The deal’s not completed yet, but already there’s speculation on who might run Donna Karan International once LVMH Moet Hennessy Louis Vuitton takes over.
Although there’s been no word on whether John Idol, chief executive officer of DKI, will keep his job, sources say it’s unlikely he’ll remain with the company long term.
Among the purported contenders for the top DKI post are Giuseppe Brusone, former managing director of Giorgio Armani; Gabriella Forte, ceo of ibeauty.com and former president and chief operating officer of Calvin Klein Inc., and Stephen L. Ruzow, chairman and ceo of Pegasus Apparel Group and a previous president and chief operating officer of DKI, who is seen as a long shot. Another name that has been cited is Denise Seegal, former president of Liz Claiborne Inc.
According to Idol’s contract, which expires June 30, 2002, if there’s a change of control or a merger of the company that results in Idol’s termination, he is entitled to three times his base salary, plus three times his total bonus compensation [performance and incentive] for the immediately preceding fiscal year. That could amount to a payout of $5.1 million. That would be in addition to his options that would vest and be exercisable immediately. However, the strike price of his options is in excess of the proposed $8.50-a-share deal.
The contract says that Idol is entitled to $950,000 for each of the 2000 and 2001 fiscal years, in addition to a performance bonus, which can’t exceed $750,000. In fiscal 1999, Idol received a $900,000 base salary plus a $750,000 bonus, the same as in 1998.
Idol has been ceo of DKI since July, 1997, prior to which he was group president of licensing at Polo Ralph Lauren. He was unavailable for comment Friday.
As reported, LVMH has agreed to buy Gabrielle Studios, the privately held licensor of the Donna Karan and DKNY trademarks, owned by Donna Karan and her husband, Stephan Weiss, for $450 million and also made a proposal to acquire DKI for $195 million.
While there’s no timetable on a changeover in management, the agreement to buy DKI has certain financial incentives if the deal is completed within six months.
Brusone, Seegal and Forte couldn’t be reached for comment Friday, and Ruzow had no comment.
Brusone, who appears to be heading the list, resides in Milan and is friendly with both Karan and Bernard Arnault, chairman of LVMH. Karan and Brusone were introduced through Christina Ong, whose Club 21 operated the DKNY and Donna Karan business in the Far East and the Giorgio Armani business in the U.K. The two had talked about working together several years ago.
During Brusone’s 14-year tenure at Armani, he served as the designer’s “right hand” and helped extend Armani’s reach beyond Europe and America to a global level. A low-key executive, Brusone joined Armani from Cidat, the division of GFT SpA that once produced Valentino’s women’s collection. Before that, he worked at the Italian fashion house Basile.
At the time of Brusone’s resignation, sources said he and Armani repeatedly locked horns over strategy. Brusone wanted to sell to Gucci Group or LVMH, and Armani was reluctant. Some even said Brusone had gotten cozy with fashion executives at LVMH and that Armani may have been feeling some pressure to sell. Sources also said at the time that Brusone was tired of the job and wanted to retire to start enjoying life a bit more.
Forte served as executive vice president of Giorgio Armani’s U.S. operations before joining Calvin Klein Inc. as president and chief operating officer. Last year, she joined ibeauty.com as ceo. She and Karan are said to be friendly, and Karan had tried to hire Forte several years ago, before she took the job at Calvin Klein.
Ruzow has held top jobs at a number of apparel companies during his 38-year career, including Gottex, DKI and The Warnaco Group, where he served as president of the Calvin Klein underwear and accessories division before joining Pegasus.
Ruzow resigned as president and chief operating officer of DKI, posts he held since 1989, soon after Idol came aboard as ceo in July 1997 because he was not interested in being a subordinate at the company.
During the past year, Pegasus has made several key acquisitions in an effort to lay the foundation for a designer/luxury company. Its holdings include Miguel Adrover, Pamela Dennis, Daryl K and Judith Leiber — companies that could be of interest to LVMH.
Pegasus Apparel Group operates with assets from a private equity fund of the Greenwich, Conn.-based Pegasus Capital Advisors, a money manager for institutional investors such as corporate pension plans. Pegasus Capital Advisors’ private equity funds are valued at more than $800 million.
Ruzow is still friendly with Karan and Weiss, and sources say Karan would feel comfortable with him.
Seegal, one of the most prominent female executives in the industry, resigned as president of Liz Claiborne Inc. in November after four years in the post. She and Paul Charron, chairman and ceo, had apparently reached an impasse on planned structural changes at the $2.81 billion firm.
Seegal joined Claiborne in 1996 after a brief stint as president of CK Calvin Klein’s women’s and men’s collections. She was lured to Calvin Klein from DKI, where she had been president of DKNY, and was credited with building that business into a department store powerhouse.
As reported, Karan’s agreement with LVMH stipulates that as long as Karan is an employee of the company, she has the first right to choose the ceo from a list of three candidates provided by LVMH. If she doesn’t make a selection by the appropriate date, then the board of Karma — the name used in the agreement to refer to the company acquired by LVMH — will make the selection.