DONNA KARAN TO CUT BASE PAY TO $100,000
Byline: Thomas J. Ryan
NEW YORK — Donna Karan has agreed to reduce her annual base salary this year and next to $100,000 as part of the firm’s restructuring efforts, according to Donna Karan International’s just-released proxy statement.
The salary cut became effective last November when the firm announced 175 employees would be laid off in closing seven outlet stores and consolidating its women’s Collection and DKNY divisions. The move resulted in an $11 million charge in the fourth quarter but is expected to lead to cost savings of $6 million a year.
The proxy filing said the designer and chairman decided to cut her salary “in connection with and in support” of the restructuring. Last year Karan received a base salary of $438,461 plus a $326,503 bonus — her first since taking the firm public in 1996.
Her contract calls for an annual salary of $500,000 plus up to 100 percent in bonus.
As reported, Karan, along with Stephan Weiss, her husband and vice chairman, also received $25 million last year under the Gabrielle Studio agreement, through which she licenses the firm’s trademarks back to the company. In 1998, the couple, who own 23.8 percent of the firm’s stock, earned $19.5 million under the licensing arrangement.
John Idol, chairman and chief executive, received a $900,000 base salary plus a $750,000 bonus last year, the same as in 1998.
The filing also noted that in March 2000, Idol elected to have all of his vested and unvested options — amounting to 600,000 shares — canceled and replaced with 299,783 shares of restricted stock. The restricted stock vests in three years, but possibly sooner, in 20 percent increments once the stock reaches $12. Full vesting occurs at $20.
Idol received most of the options upon joining the firm in August 1997, when they had an exercise price of $10.44 each. Shares of Karan closed Thursday at 7 5/16, down 3/16, on the New York Stock Exchange.
The proxy noted that last year a total of 63 employees received bonuses under the firm’s executive incentive plan, while the company earned $10 million or 46 cents a share, against $128,000 or 1 cent the year before. Sales moved ahead 6.3 percent to $661.8 million.
Among other executives, Lee Goldenberg, corporate executive president of worldwide operations, received $601,019 against $535,000 a year ago; Joseph B. Parsons, corporate executive president, chief financial and administrative officer, $698,654 versus $522,500; and Lynn E. Usdanz, corporate senior vice president and secretary, $459,230 versus $337,500.