NET SHORTFALL COST WACHNER BONUS IN ’99

NEW YORK — Linda J. Wachner, chairwoman and chief executive of Warnaco Group, missed out on her bonus last year because earnings fell short of goals.
Wachner, one of the highest-paid women in corporate America, was still well paid, with total compensation reaching $7.7 million in 1999, including $2.7 million salary, $4.6 million worth of restricted stock awards and $364,927 in other compensation. But Wachner’s total pay package was down from $17.2 million in 1998, with the pay cut primarily stemming from the lost bonus and reduced stock awards. The last time Wachner did not receive an annual bonus was 1993.
Her 1998 pay was boosted by a $6 million bonus and $6.5 million in restricted stock awards. The 1998 bonus included a special $4.7 million payment for acquiring sublicenses for Calvin Klein jeans.
The proxy said Wachner did not receive a bonus in 1999 because operating earning targets were not met. Warnaco’s 10K notes that EBITDA (earnings before interest, taxes, depreciation and amortization) adjusted for nonrecurring items slid to $367.2 million last year from $384.8 million. Revenues nudged up 0.8 percent to $2.1 billion.
The compensation committee’s report noted that Wachner voluntarily elected to forgo compensation due her under her employment agreement with Authentic Fitness, another firm headed by Wachner, which Warnaco acquired in December 1999. Under her Authentic Fitness contract, she was entitled to a $1.1 million base salary plus up to two times her salary in bonus.
Restricted stock awards were based on return on equity for 1998. Wachner received 3.25 million in stock options exercisable at $25.50 each because of her leadership since taking over Warnaco in a leveraged-buyout in 1986. Shares of Warnaco Monday closed at 11 1/16, up 1/4, on the New York Stock Exchange.
Warnaco’s other executives also missed bonuses, including William S. Finkelstein, senior vice president and chief financial officer, who received $857,300 versus $942,589; Stanley P. Silverstein, vice president, general counsel and secretary, $749,000 versus $1.34 million; and Carl J. Deddens, vice president and corporate controller, $298,335 versus $423,333.
The proxy also noted that The Presbyterian Church, based in Louisville, Ky., and owner of 100 shares, and Citizens Funds, based in Portsmouth, N.H., and owner of 7,400 shares, will bring a proposal up at the annual meeting to develop, together with religious, labor and human rights institutions, independent monitoring programs to ensure that Warnaco’s products aren’t being made under abusive labor conditions, partly to avoid negative publicity from sweatshop discoveries.
Warnaco opposes the proposal, believing it is “an industry leader in human rights and labor compliance for its factories and contracting facilities.”

load comments
blog comments powered by Disqus