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Industry CEOs Suffer Steep Pay Cut in 2012

Industry executives saw their compensation plunge by an average of 32% in 2012 compared to 2011, according to proxy statements filed so far this year by the more than 20 top publicly-traded apparel and footwear manufacturers and retailers. CEO compensation packages typically include salary, bonus, and company stock awarded during the year.

The decline is a bit surprising, since earnings of these companies doubled, on average. But sales were flat, and a lack of topline growth can put pressure on future profitability. Also, pay packages are often tied to results, so it could be that many of these CEOs paid the price for their companies’ failure to meet aggressive profitability objectives set by their boards.

Total sales at these firms — which include VF Corporation, UGG maker Deckers, American Eagle, Buckle, Ann Inc., Zumiez, and many others  – rose by less than 1% last year, after growing 3.5% between 2010 and 2011. Earnings increased by 95%, after falling for half of the previous year. The total compensation earned by CEOs at these companies slipped from $308 million in 2011 to $211 million.

Former JCP CEO Ron Johnson

The biggest impact on the total came from JCPenney, whose now-former CEO Ron Johnson’s total compensation was a meager $1.9 million – quite a decline from 2011’s $53 million. Total JCP revenue dropped by 25% in the year, and losses plunged from $152 million to a lamentable $985 million.

Sears Holdings, which was pinning hopes on its former CEO Lou D’Ambrosio before sacking him, saw earnings dive 70% in 2012 on a sales slide of 4% in 2012. Mr. D’Ambrosio made $10 million in 2011, but his acting-CEO successor, majority shareholder Eddie Lampert, was paid nothing for his efforts to resuscitate the ailing retailer.

Taking JCP out of the picture, total CEO compensation was off by only 18%, and sales and income rose by 3% and 113%, respectively.

Other CEOs suffered double-digit pay cuts last year. William Dillard III’s total compensation was $4.9 million, 40% of the $11.8 million he earned in 2011, as net income at the department store retailer slipped 28% on a 5.5% increase in revenue.

Apparently the Men’s Wearhouse board didn’t like the way the numbers looked: Doug Ewert took home a little over $2 million, a 61% drop from the prior year CEO package, even though sales and net income rose 4% and 9%, respectively.

Abercrombie & Fitch CEO Michael Jeffries’s compensation was as skinny as he likes his customers to be. It declined from $48 million in 2011 to a meager $8 million last year, even though net income surged 65%.

Gap Inc. CEO Glenn Murphy

Gap Inc. CEO Glenn Murphy was the highest paid CEO in 2012, with a $24.6 million paycheck, $18.2 million of which was in company stock. Murphy saw his total compensation increase by 154%, the most of any in the list, as the company’s sales grew 8% and earnings gained 36%.

Les Wexner of Victoria’s Secret parent L Brands (formerly called Limited Brands) earned $19.3 million, even with 2011, allowing him to maintain his position as the second highest paid industry CEO. His company’s earnings dropped by 11%. Most of Mr. Wexner’s compensation was in stock awards, but a significant amount was also in non-equity incentive compensation.

Speaking of founders, although we don’t know how much Ralph Lauren made in the most recent fiscal year since the company won’t be issuing its proxy statements until at least July, the Polo CEO received $36 million in compensation last July, $6 million more than the prior year. In that period, both revenues and earnings increase by over 20%.

Macy’s CEO Terry Lundgren

Macy’s CEO Terry Lundgren received $13.8 million, down almost 22% from the $18 million he earned in 2011. During that time, Macy’s sales increased 4.9% and earnings more than doubled. Wow — tough board.

Although Children’s Place suffered an earnings drop of 35%, CEO Jane Elfers was compensated to the tune of $17 million, a 55% jump over the prior year, the second biggest increase after Mr. Murphy of The Gap. Much of Ms. Elfers’s compensation was in the form of company stock. The price of Children’s Place stock declined about 17% in 2012.

American Apparel had the lowest sales in the pack, at $617 million, an only 3% increase over 2012, yet because earnings swung from a loss of $39 million to a profit of $232 million, CEO Dov Charney took home $14.3 million, making him among the most highly paid CEOS in the industry.

Though his company’s earnings plunged by 57%, Liz Claiborne — that is, Fifth and Pacific – CEO Bill McComb made $8.2 million, up 51% from 2011. F&P sales dropped by less than 1%, even though the brand portfolio continues to be whittled down to a mere shadow of its former self.

Whenever he’s asked about his job, Foot Locker CEO Ken Hicks tells people “I sell sneakers.” Last year, he sold a cool $6.2 billion worth of sneakers and athletic apparel — 10% more than in the prior year, while earnings soared 43%. His total compensation was $11 million, a 21% decrease from 2011.

HSN CEO Mindy Grossman

HSN CEO Mindy Grossman suffered a pay cut of 9%, to $5.6 million, even though her company’s sales inched up 4% and earnings grew by 6%.

Jones Group’s Wesley Card’s pay was about the same as last year, $6.2 million, while sales were flat and earnings plunged by over 200%.

UnderArmour revenue grew 25% to $1.8 billion and earnings jumped 33%. CEO and Founder Kevin Plank, one of its largest shareholders, saw his compensation increase 35%, but that was to a level of only $1.5 million.

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