There’s been a lot of talk lately in various industries about income inequality, gender pay gaps and whether CEOs deserve the compensation packages they get. The apparel sector is no exception.
Although total revenues at 20 of the most important publicly-held apparel companies were flat in 2014, and net income rose by a total of only 11 percent, CEOs at these firms got a more than 54 percent pay raise, according to proxy statements filed by a group of companies including Gap Inc., VF Corporation, Under Armour, PVH, American Eagle, Children’s Place, Macy’s and many others.
So do apparel CEOs make too much? Read on, and you be the judge.
Les Wexner of Victoria’s Secret parent L Brands (LB) was the highest-paid CEO last year, earning $24 million, a 52 percent increase over 2013. His company’s sales rose by 6.3%, and earnings growth was about double that at 13.3%.
Wexner’s wasn’t the biggest compensation increase last year, however. That distinction goes to Men’s Wearhouse CEO Doug Ewert, who took home $9.7 million, 167 percent more than last year’s $3.6 million, thanks to the acceleration of certain stock awards and a special bonus granted after the successful acquisition of competitor Joseph A. Banks. Sales jumped 32 percent in the year, thanks to the merger, but earnings dropped.
Dennis Nelson, CEO of The Buckle, saw his pay leap 59 percent to $4.5 million. Sales at the teen retailer grew by 2 percent in the year, to $1.1 billion, but earnings were flat.
VF Corporation (VFC) chief executive Eric Wiseman got a 51 percent pay hike last year, to $18.7 million. Sales at the company, whose brands include The North Face, Vans, Timberland, Lee and Wrangler, rose 7.6% to $12.2 billion. Net income, however, dipped 15.5% to $1 billion.
Macy’s CEO Terry Lundgren received $16.5 million, a 37 percent raise from 2013. During that time, Macy’s sales increased by less than one percent to $28 billion, and earnings edged up by 2.6% to $1.5 billion. However, in 2014 the company enjoyed its fifth consecutive year of comp-store sales growth and delivered EBITDA (earnings before interest, taxes and depreciation) of 14 percent of revenues, which the company claims is the highest in the department store industry.
Foot Locker (FL) saw its sales of sneakers and athletic apparel grow by almost 10 percent in 2014 to more than $7 billion, and rewarded outgoing CEO Ken Hicks handsomely. Hicks’s total package rose by more than 33 percent to a whopping $18.8 million for the year. Net income increased by 17.5%, and the company’s stock climbed 35 percent in the year.
Sears Holdings CEO Eddie Lampert received CEO compensation of $5.7 million, up 32.3% compared to the previous year, for continuing to downsize the company. (This doesn’t include the interest Sears is paying Lampert’s hedge fund on loans.) Sales fell by nearly 14 percent to $31 billion, and the loss worsened to $1.7 billion from $1.4 billion in the prior year.
Kohl’s (SKK) CEO Kevin Mansell earned $9.7 million in 2014, an 18 percent increase over the prior year—pretty outsized considering sales were flat at $19 billion and earnings dipped by 2.5% to $867 million.
Under Armour founder and CEO Kevin Plank saw his compensation rise by 11.5% to $3.5 million after revenue grew 32.3% to $3 billion and earnings jumped 22 percent.
Children’s Place CEO Jane Elfers’s compensation package was $7.4 million, up 9 percent from 2013, as sales remained flat with the prior year and earnings rose by 6.8%.
If the examples above have you thinking it’s expensive for a company to keep a CEO, consider what it’s like to pay for two. J.C. Penney CEO Mike Ullman made $9.6 million in 2014, a fourfold increase over 2013. Although sales only rose by 3.4% at the mid-tier department store chain, the net loss was a mere shadow of its former self, at $771 million (compared to $1.4 billion in the prior year). But wait, there’s more: his successor, president and CEO-designee Marvin Ellison, received compensation totaling a whopping $19.6 million last year as well – and he won’t even be moving into the corner office until August!
Another double whammy was suffered by Kate Spade. The company formerly known as Fifth and Pacific, before which it was Liz Claiborne, paid outgoing CEO Bill McComb $26.2 million (compared to $5.8 million in the prior year) and new CEO Craig Levitt $26 million as well. Company sales rose by 41 percent to $1.1 billion, and earnings rose by 54 percent to $159 million. The stock price was flat in the year.
Not all apparel CEOs got raises.
HSN CEO Mindy Grossman saw her total compensation decline by a substantial 64.5% in 2014, to $4.9 million. Sales rose 5.4% and earnings fell 3.2% at the multichannel retailer and media company.
Dillard’s CEO Bill Dillard earned $3.9 million, a 42 percent cut from 2013, despite low-single-digit increases in both revenue and earnings.
Gap Inc.’s (GPS) Glenn Murphy earned $16 million last year, 14 percent less than in 2013. The company’s sales rose 2 percent to $16.4 billion, and earnings fell by 1.4%. Gap stock price rose 7 percent during the year. Early this year Murphy passed the reins to new CEO Art Peck.
PVH CEO Manny Chirico received a total compensation package of $13 million, down 29 percent from 2013. Though company sales edged up by only 0.7% to $8.2 billion, net income surged 67 percent from the prior year, to $439 million.
Ann Inc CEO Kay Krill took home $8.1 million, 8 percent less than in 2013, as sales edged up by less than 2 percent to $2.5 billion, and earnings plunged by almost 51 percent. Earlier this week, Lane Bryant owner Ascena Retail Group announced that it would acquire Ann Inc., so Krill may see an even bigger pay cut next year. Ascena CEO David Jaffee, whose company saw sales rise 2 percent to $4.8 billion in its fiscal year ended July 2014, saw his compensation drop 28 percent last year to $6.3 million.
The lowest pay among these prominent apparel companies went to Urban Outfitters Inc. Chairman, CEO and President Dick Haynes. Haynes, who is also founder of the company and owner of 18 percent of the stock, took home $534K last year, up from $68K in 2014. The majority of that compensation last year consisted of bonus. His salary? One dollar.