MILAN — Tom Ford and Domenico De Sole might be leaving Gucci Group in a little more than two weeks, but they’ll still get some perks after they go.
A filing with the Securities and Exchange Commission detailing the specifics of Pinault-Printemps-Redoute’s tender offer for Gucci also provides some insight into the termination agreements for Ford, as well as departing Gucci president and chief executive officer De Sole.
Gucci will “continue to pay for certain automobile and airplane leasing costs” for Ford through June 22, according to the document. Both men have contracts ending May 1. As for De Sole, he and his wife will get free health coverage for the rest of their lives. Their children also will get full coverage as long as they are in school and under the age of 25.
A Gucci spokesman said, “These things are discussed and agreements are found” regarding such exit deals for executives. He added that, unlike many other departing executives in similar situations, De Sole and Ford aren’t getting exit bonuses or so-called “golden parachutes.” A PPR spokesman declined to comment on the exit packages.
Meanwhile, the executive departures from Gucci go on and speculation intensifies over who might replace De Sole as Gucci president and ceo, with little indication of whom his successor might be. The wind emerging from the rumor mill changes direction daily.
But most market observers and sources familiar with the situation agree that PPR wants to decentralize the luxury company’s executive power base, running the group’s brands more as individual units of PPR. Such a strategy could mean PPR wants less of a high-profile fashion heavyweight than De Sole and might favor a “leftfield” candidate from another industry or an internal executive already at PPR.
Gucci employees have seen several resignation memos recently. Robert Singer, chief financial officer, and Brian Blake, president of Gucci’s watch business and the Boucheron jewelry division, said earlier this year that they would step down from their respective posts. Both are also executive vice presidents at Gucci.
Two longtime members of Gucci’s press office are also believed to be out the door. PPR and Gucci declined to comment, but WWD obtained a copy of an internal memo stating that London-based Lisa Schiek is leaving her post as worldwide director of communications on April 30. Tomaso Galli, worldwide director of corporate communications, is also seen leaving the company. It is not yet clear where they are headed, but one industry source suggested that Schiek may consider a move back to the U.S. and could work again with Ford in the future.
PPR and Gucci spokesmen also declined to comment on a Financial Times report that Gucci Japan president Toshiaki Tashiro and worldwide human resources director Renato Ricci are about to resign.
As for the exit deals for Ford and De Sole, industry observers said the perks were not exorbitant in the context of today’s business world. “I don’t think it’s excessive for a short period of time to extend benefits to individuals who had as great an impact as these two have had on a company,” said Elaine Hughes, an executive recruiter specializing in the retail and apparel industry.
Both De Sole and Ford will receive their regular salaries and benefits until May 1, when they leave Gucci. The filing said that Ford will get a pro rata portion of his guaranteed bonus through June 22, in the amount of $346,000.
The salaries each will receive for fiscal 2003 and the first few months of 2004 leading up to their departure could not be learned. Gucci discloses executive salaries in the annual report it makes public each spring and that document for fiscal 2003 has yet to be published.
In 2002, Ford and De Sole were among the best-paid luxury executives in Europe. Ford made $4.7 million, or 3.9 million euros, plus a guaranteed bonus of $1.9 million, or 1.6 million euros. De Sole made $2.7 million, or 2.3 million euros, in salary, which includes $621,244, or 520,500 euros, worth of charitable contributions that Gucci made to match those of De Sole.
The filing also said that De Sole must exercise all his remaining stock options on or before Nov. 1. At the end of January, De Sole still held options for 930,000 shares, of which 700,000 were “underwater” or not exercisable because their strike price is higher than Gucci’s current stock price. In his most recent stock trading session last January, De Sole made a capital gain of about $32 million, according to a Gucci spokesman.
In theory, Ford also must exercise his remaining options on or before Nov. 1, but the point is moot since he has nothing left to exercise. After netting at least $60 million in stock trades over the past couple of years, he has no more exercisable options remaining. At this point, he has options for 2.15 million shares, all with strike prices exceeding that of Gucci’s current share price.
— With contributions from Miles Socha, Paris