Pegging bonus to performance is a big motivator, as proven by the retail compensation figures for 2005. Not surprisingly, executives of retail darlings like Target and J.C. Penney scored well last year. And Guess’ Paul Marciano got a 235 percent boost in his paycheck following the company’s healthy profit increase. “If the net profit is there, these executives deserve it,” said Terre Simpson, president of Simpson Associates, a retail and apparel executive search firm. She also points out that “there’s less talent in the wings” now that training programs have been cut in retailing due to consolidation. Not everyone got big bonuses last year, though. Cache honcho Brian Woolf scored zero in that category, though his overall pay rose.
Robert J. Ulrich, 62, chairman and chief executive officer, Target Corp.
2005 total annual compensation: $8.26 million; percent change: 25.7
Salary: $1.5 million; bonus: $6.5 million; other annual compensation: $205,899
Credited with masterminding Target’s ultrahip image, Ulrich rightly commands high bonuses. Forbes even gave him an “A” in its “pay versus performance” category. Ulrich is currently presiding over the company’s expansion plan to open 200 stores by 2010, with 60 stores being added last October alone. Seeking to avoid Wal-Mart’s public relations woes, Target also issued its first corporate responsibility report, addressing subjects from unions to its plans for reducing greenhouse gas emissions.
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Paul Marciano, 53, co-chairman and co-ceo, Guess Inc.
2005 total annual compensation: $5.75 million; percent change: 235.3
Salary: $981,923; bonus: $4.68 million; other annual compensation: $83,969
Guess is hot by every indicator. Sales soared 28 percent in fiscal 2005 and net income was up 99 percent. The stellar results propeled Marciano onto the list of top earners this year because of a $4.68 million bonus. The sportswear company that has featured Claudia Schiffer and Paris Hilton in its ads isn’t finished striking a pose, either. It launched its first Guess fragrance and body lotion last year, and the new Marciano line launched in 2004 had 13 freestanding locations by January. The upshot: The stock price has risen from $4 a few years ago to $39 in mid-January.
H. Lee Scott Jr., 57, president and ceo, Wal-Mart Stores Inc.
2005 total annual compensation: $5.4 million; percent change: -4.4
Salary: $1.29 million; bonus: $3.94 million; other annual compensation: $162,967
At the helm of the world’s largest retailer, Scott has kept plugging away at changing the company’s image with a strong commitment to sustainable initiatives such as renewable energy and products. And even though Wal-Mart has had its ups and downs, revenues increased 9.6 percent in 2005 and net income rose 9.4 percent, although Scott received a lower bonus. Wal-Mart recently reported its first earnings dip in 10 years.
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Myron Ullman 3rd, 59, chairman and ceo, J.C. Penney Co. Inc.
2005 total annual compensation: $4.75 million; percent change: 614.2
Salary: $1.5 million; bonus: $2.66 million; other annual compensation: $592,938
Penney’s strong turnaround keeps going, now under Ullman’s guidance. His mission: a five-year growth plan to make the department store the preferred choice for middle American and middle-aged shoppers. “We had an excellent year in 2005, but we’re just getting started,” said Ullman, referring to numbers like a net income pop of 107.6 percent in 2005. In its fourth quarter alone, Penney’s saw profits rise 65.5 percent. The company opened 18 stores in 2005 and posted sales increases in most areas of the country.
Dorritt J. Bern, 55, chairman, president and ceo, Charming Shoppes Inc.
2005 total annual compensation: $4.48 million; percent change: 29.5
Salary: $1.25 million; bonus: $2.5 million; other annual compensation: $732,003
With another good year — profits rose 54 percent in 2005 — Bern scored a higher bonus once again. Since she joined the Bensalem, Pa.-based company in 1995, she has nearly tripled its sales. And she isn’t finished yet. The company plans to move into lifestyle merchandise by selling home fashions, kitchen and bath and body products. A strong advocate for women, she has an “Ask Dorrit” icon on the company home page, where Web visitors can ask her questions.
Michael S. Jeffries, 61, chairman and ceo, Abercrombie & Fitch Co.
2005 total annual compensation: $4.4 million; percent change: -1.4
Salary: $1.2 million; bonus: $2.88 million; other annual compensation: $319,101
The man who gave A&F its sizzle led the company to double-digit sales growth last year. However, last April the company also settled a shareholders’ lawsuit against the ceo under which Jeffries agree to reduce his pay by cutting in half a $12 million bonus package that stretched through 2008. As a result, his bonus was flat in 2005. Jeffries continues to push A&F into new territories, though, with the opening of its first store in Canada and a European debut with a store on London’s Savile Row.
James V. O’Donnell, 65, ceo, American Eagle Outfitters Inc.
2005 total annual compensation: $3.86 million; percent change: 32.6.
Salary: $950,000; bonus: $2.91 million
Surging profits of 37.9 percent at the specialty retailer helped increase O’Donnell’s pay nearly 33 percent, as customers snapped up private label apparel and accessories. And American Eagle is gearing up for stronger growth by launching another concept, the aerie collection of dormwear and intimates targeted at the 15- to 25-year-old customer.
Roger S. Markfield, 64, vice chairman, American Eagle Outfitters Inc.
2005 total annual compensation: $3.8 million; percent change: 33.3
Salary: $950,000; bonus: $2.85 million
Like his compatriot O’Donnell, Markfield’s compensation was in line with strong company growth. The current year looks to be another winner, since American Eagle handily beat Wall Street estimates in its second quarter with a 27 percent earnings gain. Markfield’s expertise lies in building the Eagle trade name via merchandising and marketing programs.
Leslie Wexner, 68, chairman and ceo, Limited Brands Inc.
2005 total annual compensation: $3.77 million; percent change: -21.2
Salary: $1.68 million; bonus: $758,880; other annual compensation: $1.32 million
The retail legend who built Limited Brands took a large pay cut last year. The reason: Profits were down and sales were tepid. Thus Wexner’s bonus, typically tied to performance, fell by $2.4 million from the prior year. But one Wall Street analyst noted in April that the retailer’s apparel division was “turning around faster than expected.” The company has also made sweeping management changes, and Wexner predicted that for his company the “best is yet to come.”
Terry J. Lundgren, 54, chairman, president and ceo, Federated Department Stores Inc.
2005 total annual compensation: $3.49 million; percent change: -25
Salary: $1.29 million; bonus: $2.08 million; other annual compensation: $119,192
Last year Lundgren led Federated through its merger with May Department Stores and gained control of 25 percent of the U.S. department store business. Now he is redefining the sector to attract younger shoppers and is converting the company’s May Co. stores into Macy’s, upgrading merchandise and store features along the way. Though Lundgren’s compensation dropped by one-quarter in 2005, the largest amount on the list, the company declined to disclose the reasons. He did receive, however, 275,000 underlying options for the year, compared with 137,500 in 2004.
Scott Edmonds, 49, president and ceo, Chico’s FAS Inc.
2005 total annual compensation: $3.4 million; percent change: 71.6
Salary: $996,153; bonus: $2.4 million
When Edmonds joined the Chico’s team in 1993 as operations manager, the company was on the brink of bankruptcy. In 2003, he became president and ceo, helping transform Chico’s into a leading retailer targeting the over-35 woman. His formula is working, propelling him into the top earners last year. Annual sales in 2005 grew 31.7 percent to $1.4 billion, and its record net income rose 37.4 percent to $194 million in 2005.
Susan P. McGalla, 42, president and chief merchandising officer, American Eagle Outfitters Inc.
2005 total annual compensation: $3 million; percent change: 124
Salary: $800,000; bonus: $2.2 million
McGalla joined the company in 1994, and three years later became its general merchandise manager in the women’s division. Last year, she was promoted to president of the division, and she now directs design, merchandising and marketing functions, as well as the company’s significant growth within the teen sector.
Brian Woolf, 57, chairman and ceo, Cache Inc.
2005 total annual compensation: $2.9 million; percent change: 22.6
Salary: $554,808; other annual compensation: $2.40 million
In May, Cache exited its Lillie Rubin business and introduced the new Cache Luxe concept, expanding casual and eveningwear offerings. Woolf’s explanation in May: “We believe that we can better capitalize on Cache’s strong brand recognition with our Luxe concept, as we take advantage of Cache’s significant customer loyalty and national advertising campaign.” In 2005, Woolf’s pay rose 197.4 percent based on strong store sales; this year, profits were nearly flat.
John P.D. Cato, 55, chairman, president and ceo, Cato Corp.
2005 total annual compensation: $2.83 million; percent change: 37.7
Salary: $862,500; bonus: $1.97 million
Involved in the family business since he was seven, Cato helped the company escape bankruptcy in the early Nineties by finding a niche within the competitive women’s apparel and accessories landscape. His solution: offering unique products at budget prices. Last year, the company’s net income rose 28.7 percent to $44.8 million, pushing up Cato’s bonus.
John B. Menzer, 55, vice chairman responsible for the U.S.,Wal-Mart Stores Inc.
2005 total annual compensation: $2.81 million; percent change: 0.7
Salary: $943,846; bonus: $1.65 million; other compensation: $219,318
Promoted in September 2005 to vice chairman of the American business, Menzer handles the division’s real estate, logistics, information services, benefits, global procurement, financial services, store planning and strategic planning. Previously, he helped transform Wal-Mart’s international division, expanding the company globally and devising plans to open Wal-Mart stores in India.
Jay Margolis, 57, group president, apparel, Limited Brands Inc.
2005 total annual compensation: $2.51 million; percent change: N/A
Salary: $1.1 million; bonus: $1.38 million; other compensation: $21,698
Margolis, a newcomer to the list, joined Limited in March 2005 and is spearheading a turnaround at Express and The Limited Brands. Previously, he served as president and chief operating officer of Reebock International, where he launched the activewear company’s retail flagships in London, Los Angeles, New York, Philadelphia and Tokyo, as well as in China.
Arnold B. Zetcher, 65, chairman, president and ceo, Talbots Inc.
2005 total annual compensation: $2.4 million; percent change: 14.7
Salary: $1.17 million; bonus: $797,300; other compensation: $428,108
Zetcher’s plate is full. He’s currently shepherding Talbots through a restructuring phase that includes the $517 million acquisition of J. Jill Group in May and the recent announcement of the closing of the Talbots customer service and catalogue call center in Hingham, Mass. In 2005, company sales rose 6.5 percent to $1.8 billion.
Alan J. Lacy, 52, former vice chairman, Sears Holdings Corp.
2005 total annual compensation: $2.3 million; percent change: N/A
Salary: $1.26 million; bonus: $772,296; other compensation: $267,108
In late July, Lacy stepped down as vice chairman of Sears Holdings and resigned from the boards of Sears Holdings and Sears Canada. He was replaced as ceo last year after Sears, Roebuck and Co. merged with Kmart. Lacy had long faced criticism from Wall Street for failing to revive Sears’ sales after many turnaround attempts. In a proxy statement filed in April, the company said Lacy’s option grants would increase if he resigned within 30 days of June 30.
Gregg W. Steinhafel, 51, president, Target Corp.
2005 total annual compensation: $2.23 million; percent change: 24
Salary: $1.01 million; bonus: $1.16 million; other compensation: $56,624
Considered to be Ulrich’s likely successor, Steinhafel has played a major role in transforming Target into a trendy discount retailer with stylish offerings. Known for his hands-on approach, he pays regular visits to Target stores and its competitors to see how they measure up.
Carol Meyrowitz, 52, president, TJX, TJX Cos. Inc.
2005 total annual compensation: $2.22 million; percent change: 42.4
Salary: $957,693; bonus: $1.2 million; other compensation: $64,434
In October, Meyrowitz became the nation’s largest off-price retailer’s president. Her appointment came on the heels of Ted English’s resignation amid concerns “over the performances of some of its smaller divisions.” Meyrowitz was previously TJX’s senior executive vice president and then president of its largest division, Marmaxx Group.