STORES Magazine - January 2008 - (Page C10)

THE RETAIL CEO PAY REPORT 2008 and that what appears to be a mismatch between pay and performance — Noddle received a 52 percent boost in 2006 as his company’s earnings dropped by nearly the same percentage — may not be as extreme as it might appear. Perhaps the most startling disparity occurred Public companies in the case of Andrea Jung of Avon Products. have had to come to Year over year, Avon’s net income declined terms with the fact 43.6 percent, but Jung’s total compensation inthat retail CEOs are being wooed by other creased 791.4 percent. This is less extraordioptions, such as nary than it seems, however. Avon is in the private equity firms midst of a major restructuring, in the course of ecutives. Many contend that hiring the which Jung took a 90 percent pay cut between best person they can find to lead a compa2005 and 2006. Even with the current adjustment, she’s ny in today’s complex global economy is worth every still making less than she did two years ago. penny. To be sure, the skills and responsibilities that come As several experts have pointed out, an important deterwith the top job are intense — and the number of people minant driving up CEO pay is the demand for talented exwho can fill these roles is limited. In addition, public companies have had to come to terms with the fact that retail Movin’ on Up . . . CEOs are being wooed by CEO COMPANY TOTAL TOTAL COMPENSATION TOTAL COMPENSATION PRIOR TO COMPENSATION other options, such as private LAST FISCAL YEAR LAST FISCAL YEAR % CHANGE equity firms. In nearly every Andrea Jung Avon Products 13,320,565 1,494,267 791.44% instance the PE firms are caMichael Jeffries Abercrombie & Fitch 26,196,918 5,054,153 418.32 pable of paying more and Margaret Whitman eBay 15,741,036 3,101,067 407.60 providing a wider swath of inTerry Lundgren Macy’s 15,647,117 3,499,513 347.12 centives – not to mention dimHoward Levine Family Dollar Stores 3,117,263 799,929 289.69 ming the white hot spotlight of Wall Street. By far the heftiest pay increase — 791.4 percent — went to Andrea Jung of Avon Products, Another bone of contention but it marks a return to earlier levels of compensation following a 90 percent reduction in when assessing CEO pay is 2006. Avon, the subject of a fair amount of “will-they-make-it-or-not” speculation, is still in the throes of a major restructuring that began in late 2005. By effectively restoring Jung’s the use of options and equity compensation to its 2005 level, the board may have been signaling “all clear” — a bit preawards to reward executives maturely, perhaps, given the company’s earnings performance last year. when the company’s share Mike Jeffries was rewarded for steering Abercrombie & Fitch to 20 percent sales growth price rises, rather than when and 26.4 percent net income growth in 2007. its operations improve. Earn. . And Movin’ on Down ings for Limited Brands fell by CEO COMPANY TOTAL TOTAL COMPENSATION TOTAL a little more than 1 percent COMPENSATION PRIOR TO COMPENSATION LAST FISCAL YEAR LAST FISCAL YEAR % CHANGE last year, but total stockholdJeffrey Rein Walgreen 2,181,661 2,040,149 6.94% er return increased 22.9 percent; sales at Darden RestauClarence Otis Darden Restaurants 3,855,766 3,789,258 1.76 rants were off slightly and Thomas Ryan CVS Caremark 24,020,009 25,688,784 -6.95 earnings were down 40 perJames Sinegal Costco 454,629 497,971 -8.70 cent, but TSR rose 30 percent. Robert Niblock Lowe’s 6,600,370 7,840,409 -15.82 The stock market was not Judging by the numbers, none of the companies run by these CEOs is in trouble. Lowe’s universally kind, however. is up in both sales and profitability, as are Costco and CVS Caremark. Darden Restaurants’ eBay showed a slight earnings earnings are off 40 percent, but Walgreen is doing fine. increase (4 percent), but its This cluster of companies does provide an interesting look at the variability of CEO comlagging stock price caused pensation, however. In terms of sales and profits, Walgreen is a larger company than CVS TSR to drop 30 percent. eBay, Caremark – yet Jeff Rein’s compensation is an order of magnitude smaller than that of Tom incidentally, is a great examRyan. ple of the market’s capriciousCharts: Reuters Fundamentals ness: As of early December, its C6 STORES / JANUARY 2008 WWW.STORES.ORG http://WWW.STORES.ORG

Table of Contents Feed for the Digital Edition of STORES Magazine - January 2008

STORES Magazine - January 2008 Contents Executive Editor's Page President's Page Build a 'Bot Sneak Peek at Fashion Trends What Shoppers Think 10 Things You May Have Missed Numbers Worth Counting Full Price/Markdown Retail People Cover Story: Fishing for Talent Retail CEO Compensation Research Concept2Watch E-Commerce Payment Solutions Online Merchandising POS LPInformation LP Vantage Point Newsbeat Industry Watch Cover Story: Making LP PCI-Compliant Mall Security Video Surveillance Industry Perspective Forum RFID Business Intelligence Data Management Logistics Turning Green into Gold Love of – and for – the Outdoors Loeb Retail Letter ARTS Update Point of View NRF News Retail Industry Calendar Last Laugh

STORES Magazine - January 2008

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