|
Articles with HMA Quotes FOOTWEAR EXECS REAP BIG REWARDS IN '04 CEO PAYDAY
Footwear News
Thomas J. Ryan
NEW YORK -- In a year marked by blockbuster acquisitions and impressive earnings gains, many of footwear's top executives banked hefty paychecks in 2004.
For the third year in a row, the large majority of CEOs took home fatter compensation packages. Nineteen of the 30 top execs included in this year's Footwear News survey pocketed more than in the prior year, according to recent figures filed with the Securities and Exchange Commission. The average pay for those at footwear's biggest publicly held companies was $1.6 million.
Compensation ranged from the $7.2 million handed to Foot Locker Chairman, CEO and President Matt Serra to a relatively modest $339,087 for Bakers Footwear Chairman and CEO Peter Edison.
To calculate each CEO's pay package, FN added up the base salary, annual bonus and "other compensation," which includes pension benefits and, in some cases, long-term incentive payouts and restricted-stock awards.
The overall pay trend remains strong because the talent pool is limited, noted Bob Nahas, managing director at Herbert Mines Associates.
"Being a CEO is a tough job," added Kirk Palmer, who heads his eponymous executive search firm Kirk Palmer & Associates. "They are running businesses that are very competitive and slugging it out every day to eke out sales increases every year. [The compensation levels] are going market rates."
Compensation packages are largely tied to earnings, although sales and stock performance, as well as metrics such as inventory turnover, cash flow and leadership roles sometimes play a role in determining yearly bonuses and stock grants.
Not all head honchos were in the money, however. Top execs from Steve Madden and The Sports Authority missed out on bonuses because they underperformed. And lower bonuses were handed to the leaders of Brown Shoe Co., Bakers Footwear and Rocky Shoes & Boots.
On the Rise
For the second year in a row, Foot Locker's Serra was the highest-paid exec on the survey. In 2004, his pay package included a $1.5-million base salary, a $1.66-million bonus, $1.9 million in restricted stock awards, $2.1 million in long-term incentive awards and other incremental incentives.
It's no surprise that the athletic retail giant's top exec had another big year, given the company's 17-percent increase in income from continuing operations. Serra also oversaw the acquisition of Footaction, giving Foot Locker an even bigger share of the athletic market.
Still, Serra's overall compensation was less than his package of $11.18 million in 2003, when he took home $5.7 million in restricted stock.
Foot Locker USA President and CEO Rick Mina also ranked among the highest-paid execs last year, earning $4.03 million in 2004 versus $3.1 million in 2003.
Timberland President and CEO Jeffrey Swartz, who benefited from special payouts, came in at No. 2 on the list.
Overall, Swartz netted a compensation package of $6.95 million, up from $6.34 million in 2003. His base salary inched up slightly, to $737,500, from $687,500, while his bonus dipped to $1.43 million, from $1.75 million.
Swartz's big boost came from a $4.6-million restricted stock award under a long-term incentive program. In the meantime, he also realized a whopping $22 million by exercising options on 523,500 shares. (These options are not included when determining salary.)
Timberland EVP and COO Kenneth Pucker also had a banner year. He earned a $7.2-million grant of restricted-stock awards under a long-term incentive plan, lifting his total compensation to $8.64 million.
Phil Knight, who stepped down as Nike's chief executive in December but continues to serve as chairman, was the third-highest-paid CEO on the list.
Knight was one of the biggest percentage gainers last year, thanks in part to Nike's rebounding sales in the U.S. market.
For the year ended May 31, Knight earned $4.2 million, well above the $2.8 million he nabbed in 2003. His bonus rose to $2.3 million, from $1.2 million in the year-ago period, while his long-term incentive payout increased to $456,000, from $320,000.
William Perez, who has assumed the CEO spot at Nike, is also set to bring home big bucks in the coming year. Perez will receive an initial annual base salary of $1.35 million, a restricted stock grant of $2 million and additional cash bonuses.
In the meantime, Nike brand copresidents Mark Parker and Charles Denson also continued to reap big rewards. All told, Parker earned $3.4 million while Denson netted $3.2 million. Both received $800,000 in restricted stock awards, as well as higher bonuses.
Jones Apparel's top footwear exec Rhonda Brown -- who is the only woman on the list -- was handed $2.9 million, only slightly less than the $3.04 million she earned in the prior year. Her base salary increased to $1.3 million, from $1.2 million and her bonus of $1.5 million stayed the same. In 2003, however, she received stock awards of $329,700 but took home no such award in 2004.
The Bonus Factor
For some top footwear execs, 2004 was all about the bonus.
At Reebok, Chairman and CEO Paul Fireman received a $1.68-million bonus because the company exceeded pretax operating profit targets and operating cash-flow measures. Overall, Fireman saw his package increase to $3.17 million, compared with $2.81 million in 2003.
Deckers' Douglas Otto also saw his annual bonus surge to $1.5 million, from $813,000 after the company generated revenue and earnings increases. Otto also received $376,000 in restricted-stock awards against none in 2003. His overall compensation grew to $2.2 million, against $1.2 million in the prior year.
Angel Martinez, who took over as Deckers' CEO on April 11, will receive a $345,000 base salary in his first year with the company; he is also eligible for a bonus.
At Finish Line, Alan Cohen saw his annual bonus expand to $545,000, from $509,184, as the company turned in another solid year. The bonus lifted his overall compensation to $1.06 million, from $942,411. Finish Line President Glenn Lyon earned $718,914, versus $578,577 in 2003.
Kenneth Cole's bonus increased slightly, to $1.2 million, from $1 million, lifting his overall compensation to $2.25 million, from $2.1 million. His company's proxy statement noted that his base salary of $1 million was between the 50th and 75th percentile for CEOs in his peer group.
The compensation committee noted, however, that since Cole also serves as chief designer, his total compensation is below the market rate of other execs in similar roles.
Lacrosse Footwear's Joseph Schneider saw his bonus grow to $347,049, from $150,058, lifting his overall compensation to $697,045, from $414,218. Lacrosse's net income catapulted to $7 million, from $2.6 million.
Several execs, meanwhile, were awarded bonuses after missing out in 2003.
Genesco Chairman and CEO Hal Pennington, for one, got a $916,650 bonus, lifting his overall compensation to $1.51 million, from $592,926.
Skechers' Chairman and CEO Robert Greenberg received a bonus of $250,000 in 2004, his first bonus since 2001, based on improved performance at the company and its stock.
Beyond his bonus, however, Greenberg passed up his total salary last year. (In 2003, Greenberg, whose family controls majority interest in Skechers shares, received a base salary of $986,538.)
Meanwhile, the highest-paid exec at Skechers was President Michael Greenberg, who netted $971,019.
Payless ShoeSource's Steven Douglass received his first annual bonus since 2000. The $678,750 boost brought his overall compensation to $1.65 million. In the prior year, he earned $2.87 million, driven in part by a reward of $1.82 million in restricted-stock awards.
As previously reported, Douglass resigned from his post in May. Newly tapped CEO Matt Rubel will pick up a base salary of $1 million and be eligible for an annual cash bonus of 75 percent or more of his salary.
In addition, Rubel will receive options to purchase 720,000 shares of Payless common stock as well as a $640,000 one-time cash award to make up for profit sharing and annual bonuses he would have received at Cole Haan.
Weyco's Thomas Florsheim earned an annual bonus of $60,000 against none the prior year, bringing his total compensation to $519,000, from $437,000.
But while most execs were awarded bonuses last year, a few head honchos lost out.
At Brown Shoe, Ron Fromm's annual bonus shrunk to $250,000, from $536,145. Still, his overall compensation vaulted to $1.53 million, from $1.49 million, because he received a long-term incentive payout of $480,582 versus none in 2003.
Bakers Footwear's Peter Edison saw his bonus cut to $38,125, from $145,000, which shrank his overall pay to $339,087, from $435,000.
Stride Rite's David Chamberlain's annual bonus also dipped slightly, to $150,082, from $189,970, reducing his overall compensation to $855,886, from $869,823. And Columbia Sportswear's Timothy Boyle saw his annual bonus slide to $903,700, from $970,761. Rocky's Mike Brooks' bonus shrank to $183,000, from $231,000.
Additionally, The Sports Authority's Doug Morton received only a base salary of $934,999, as earnings fell well short of targets. In 2003, Morton was compensated $3.3 million, boosted by the combination of a restricted stock award and a big bonus.
Steve Madden's Jamieson Karson also missed his bonus as the company's net income dropped 40 percent last year. (In 2003, he received a $108,056 bonus.) His overall compensation was reduced to $613,726, from $863,519.
The highest-paid exec at the company was Steve Madden, who just completed a 41-month stint in jail for a stock-fraud scheme. Madden, who now serves as the company's creative and design chief in a nonexecutive position, receives an annual salary of $700,000, whether or not he is actively engaged in his duties.
The Big Winners
A look at the paychecks of the five highest-paid CEOs by category.
Athletic Vendors
CEO, Company: 2004 Pay; 2003 Pay; Change
Phil Knight*, Nike: $4.2M; $2.8M; 50.0%
Paul Fireman, Reebok: $3.17M; $2.81M; 12.8%
Steven Nichols, K-Swiss: $1.97M; $1.95M; 1.0%
Timothy Boyle, Columbia Sportswear: $1.65M; $1.68M; -1.8%
John Fisher, Saucony: $1.16M; $955,775; 21.4%
Athletic Retailers
CEO, Company: 2004 Pay; 2003 Pay; Change
Matt Serra, Foot Locker: $7.24M; $11.18M; -35.2%
Edward Stack, Dick's Sporting Goods: $3.31M; $2.41M; 37.3%
Alan Cohen**, Finish Line: $1.06M; $942,411; 12.5%
Doug Morton Sports Authority: $934,999; $3.3M; -71.7%
Mickey Newsome, Hibbett Sporting Goods: $577,364; $547,000; 5.6%
Nonathletic Retailers
CEO, Company: 2004 Pay; 2003 Pay; Change
Heyward Wolinski, Retail Ventures: $3.54M; $873,245; 305.4%
Blake Nordstrom, Nordstrom: $2.74M; $2.89M; -5.2%
Steven Douglass, Payless ShoeSource: $1.65M; $2.87M; -42.5%
Ronald Fromm***, Brown Shoe: $1.53M; $1.49M; 2.7%
Mark Lemond, Shoe Carnival: $657,898; $638,487; 3.0%
Nonathletic Vendors
CEO, Company: 2004 Pay; 2003 Pay; Change
Jeffrey Swartz, Timberland: $6.95M; $6.34M; 9.6%
Rhonda Brown, Jones Apparel: $2.9M; $3.04M; -4.6%
Timothy O'Donovan, Wolverine Worldwide : $2.4M; $2.1M; 14.3%
Kenneth Cole, Kenneth Cole Productions: $2.25M; $2.1M; 7.1%
Doug Otto, Deckers Outdoor: $2.2M; $1.16M; 89.7%
Source: Company reports, SEC filings. Note: All retailers derive at least 20% of sales from footwear. *Figures for fiscal year ended 5/31/04. **Figures for the year ended 2/28/05. ***More than 50 percent of Brown Shoe's revenues came from its retail operations.
Adding It Up: A look at the factors compensation committees use to determine CEO paychecks.
- In most cases, the compensation committee of each company meets at least once a year to establish criteria on which the performance of the CEO and other senior managers are measured.
- Generally, the larger the company's size, the larger the paycheck.
- Compensation packages are largely tied to earnings, although sales and stock performance, as well as metrics such as inventory turnover, cash flow and leadership roles, sometimes play a factor in determining yearly bonuses and stock grants.
- Restricted stock and stock options are used not only to tie a CEO's compensation to stock performance, but also for retention purposes since more vest in three to five years.
- Overall, stock options are being used as less of an incentive because of accounting changes resulting from the Sarbanes-Oxley Act. -- T.J.R.
|
