’99 BONUSES BULGE AT CLAIBORNE
Byline: Thomas J. Ryan
NEW YORK — Fatter bonuses arrived for the top executives at Liz Claiborne Inc. in 1999.
Paul R. Charron, chairman and chief executive, saw his annual bonus jump to $1.05 million from $500,000, lifting his overall compensation to $2.84 million. He also received a $1.1 million base salary and $694,751 in other compensation, mainly life insurance premiums.
In 1998, Charron earned $5.2 million, but that largely stemmed from the reward of $3 million in restricted stock awards. He had no restricted stock awards in 1999.
Claiborne’s compensation committee said Charron’s 1999 bonus was the maximum under his contract, since 1999 earnings per share and return on invested capital exceeded previously set targets. Claiborne’s earnings per share last year grew to $3.13 from 2.59, although 1998 included a 26-cents-a-share restructuring charge. Claiborne’s return on investment was 19.4 percent.
The committee also said it determined that Charron had fulfilled individual goals involving growth strategies, technology implementation, customer responsiveness and management development. Claiborne acquired Sigrid Olsen, Lucky Brand Dungarees and Laundry by Shelli Segal, and reached new agreements for women’s apparel with Kenneth Cole Productions and Donna Karan International.
The committee further said that “in light of his ongoing outstanding leadership, and in order to provide him with continuing strong future incentives,” it awarded Charron options covering 185,000 shares at exercise prices ranging from $35.81 and $65 a share. Claiborne’s other top executives also received higher bonuses, but the special restricted stock award payout in 1998 reduced year-over-year compensation. Denise V. Seegal, president, earned $1.35 million against $2.24 million; Richard F. Zannino, senior vice president and chief financial officer, $893,000 versus 909,675; John R. Thompson, senior vice president of service, systems and distribution, $1.3 million versus $2.24 million, and Robert J. Zane, senior vice president of manufacturing and sourcing, $524,500 versus $954,163.
Claiborne’s 10K was also filed and noted:
As of March 17, Claiborne’s order backlog was $785 million, down from $862 million a year ago.
Largest customers were Federated, representing 17 percent of sales; May Department Stores, 16 percent, and Dillard’s, 15 percent.
Claiborne plans to add about 3,000 in-store shops in 2000. Last year, shops added in traditional department stores consisted of 1,400 Liz Claiborne branded apparel, 400 accessories, 400 men’s, 13 Dana Buchman, 70 Emma James, and 800 DKNY Jeans. About 1,100 Crazy Horse shops were installed at J.C. Penney and 175 First Issue shops in Sears.
Claiborne spent $40 million on national advertising in 1999 and plans a similar amount in 2000. In 1998, it spent $32 million.
The company incurred costs of $64 million under cooperative advertising programs with department stores, compared with $57 million in 1998.
Claiborne ended the year with $38 million in cash and cash equivalents and $116 million in debt versus $230 million in cash and no debt at the end of 1998. Outlays included $281 million to buy its own stock, $178 million for acquisitions, $98 million in capital spending to cover warehouse automation and information systems and build in-store shops, and a $29 million equity investment in Kenneth Cole Productions.
Capital expenditures are set at $75 million, to upgrade technology, expand management information systems and distribution facilities, improve leases at New York City offices and open 27 specialty and 25 outlet stores. The firm plans to spend $25 million on in-store shops. At yearend, it operated 99 specialty retail and 144 outlet stores.