JOHN IDOL OUT AT DKI WITH $13M PAYDAY AS BRUSONE STEPS IN
Byline: Eric Wilson
NEW YORK — John Idol stepped down as chief executive officer of Donna Karan International on Friday, three months earlier than expected, accelerating the company’s executive succession plan put in place by its proposed new owner, LVMH Moet Hennessy Louis Vuitton.
According to insiders, Idol left without many “goodbyes,” but he also walked out the door with a compensation package estimated to be worth $13 million — one of the biggest payouts ever on Seventh Avenue. He also has a new job lined up, but would not divulge any details when reached by phone, saying only that an announcement is expected this week.
Idol’s next move has been a matter of widespread speculation since LVMH’s deal to acquire the publicly traded Donna Karan company was announced in December. The prevailing rumor has Idol going to Nautica, possibly heading up the launch of a women’s business for its John Varvatos men’s wear division, which is expected to take place within the next two years.
Nautica officials did not return phone calls seeking comment.
At Donna Karan, the company said Monday that Giuseppe (Pino) Brusone has assumed the position of ceo. His planned appointment was announced in May, but he was not expected to take control of the company until the completion of the proposed merger with LVMH, which is expected to happen by early September. Brusone’s designation, news of which first appeared in WWD in January, underscores the luxury conglomerate’s belief in the overseas potential of the quintessentially American Donna Karan brand.
Brusone joined LVMH as senior vice president of acquisitions and brand development for its fashion group last year and had previously been ceo of Giorgio Armani, where he worked for 14 years.
Idol, who had been ceo of Donna Karan since 1997, said he discussed his earlier-than-expected departure from the firm with its board and was able to leave without affecting his compensation package. The 42-year-old executive, generally perceived as an expert in building licenses, was brought on board from Polo Ralph Lauren to help turn around Karan’s business at a time when the brand was spending huge amounts on product development — with little return — and had been badly punished by Wall Street.
As reported, Idol’s base salary was around $950,000, plus performance bonuses. His contract, which would have expired in June 2002, stipulated that a change in control of the company resulting in his termination would entitle Idol to three times his base salary, plus three times his total bonus compensation for the immediately preceding fiscal year. According to a filing with the SEC, as a result of the proposed merger, he also gets a $750,000 transaction bonus, provided certain conditions are met, as well as a special performance bonus of $1.25 million. He is also entitled to receive up to $50,000 in outplacement services for a period not to exceed one year.
His overall compensation, including stock payouts, is estimated to total $13 million, which ranks among the highest of the past decade. When R.H. Macy merged with Federated Department Stores in 1994, Myron E. Ullman left as chairman and ceo of Macy’s with a severance of $13 million, while Roger Farah, president and chief operating officer of the chain for just three months, left with a $14 million golden parachute.
“I am very proud of the last four years of the company, in which we went from substantial losses in 1997 to making over $22 million in pretax dollars in 2000,” said Idol, noting that in 1997 DKI recorded a pretax loss of $92 million. “That’s a big turnaround for a company that was troubled at the time and that’s a reflection of not just my leadership and direction, but of the entire team.”
While Idol’s tenure indeed saw a return to the black, it had its bumpier times too. Most notable were occasional reports of intense friction between Idol and Karan — resulting in split loyalties within the company, as well as some heated board meetings.
Under Idol’s direction, Donna Karan continued to develop its full-price freestanding store business, with the planned openings this year of a collection store at 819 Madison Avenue in New York and a DKNY in SoHo. It also embarked on an ambitious licensing campaign that resulted in deals for DKNY Jeans and City DKNY with Liz Claiborne, fragrances with Estee Lauder and watches with Fossil.
Karan had personally avoided licensing her name in the early days of her company and even attempted to build a beauty business in-house after the company went public in 1996. Its costly failure and the resulting impact on DKI stock was one of the reasons Idol was brought into the company. The firm also has licenses for outerwear, hosiery, intimate apparel, home accessories, eyewear and children’s apparel.
Meanwhile, Brusone’s appointment has been characterized by LVMH officials as symbolic of its outlook on the potential of the Donna Karan label abroad. Brusone is a European ceo in control of a stable of brands built around the imagery of New York City.
“I am delighted that Giuseppe is now on board,” chairman and chief designer Donna Karan said in a statement. “The combination of his leadership and the oversight of LVMH is certain to help take the company to its next successful stage of growth and development.”
Working in a number of divisions during his tenure at Armani, Brusone helped turn the company into one of Italy’s most profitable businesses.
He built up Armani’s licensing business to include fragrances, eyewear and watches. He also dismantled a number of clothing licenses and, in tune with company strategy, began taking production in-house. He helped set up Armani’s luxury leather accessories division and brokered the deal to buy factories from Armani’s longtime licensee, GFT Net, in order to take production of the Armani Collezioni men’s line in-house.