L.A. Gear Inc., the rapidly growing sneaker company, announced Monday that one of its top officers quit after rejecting a contract offer that would have cut his seven-figure salary.
The company, which has been dogged by speculation that its business is cooling, also released a preliminary sales report indicating that its revenue jumped 134% in its fiscal fourth quarter.
L.A. Gear's stock, which fell $8.375 last week, rose $2.25 on Monday's news to close at $35.25 on the New York Stock Exchange. At that price, the stock is up roughly twelvefold since L.A. Gear offered its shares to the public in July, 1986.
The executive who resigned was Elliot J. Horowitz, who was L.A. Gear's chief financial officer and one of its three executive vice presidents. Under a three-year contract that expired Thursday, Horowitz earned more than $2 million in 1988 and is due to draw more than $4 million for this year.
Company officials said Horowitz's contract, negotiated when L.A. Gear was a much smaller concern, entitled him to a specified percentage of the company's pretax earnings. When the company's business boomed, Horowitz's pay skyrocketed along with it.
"It's very unusual for a CFO (chief financial officer) to make that kind of money," said Gil N. Schwartzberg, the company's chief administrative officer.
Schwartzberg said L.A. Gear offered Horowitz a restructured contract that, among other things, would have cut his pay, but Horowitz balked. "Once a person makes this kind of money, it's hard to come to an agreement," Schwartzberg said.
Schwartzberg added that the company was pleased with Horowitz's performance. For an interim period, Schwartzberg will assume Horowitz's duties. Horowitz, who joined the company five years ago as its controller, could not be reached for comment.
L.A. Gear said it did reach new contract agreements with its president, Robert Y. Greenberg, and Executive Vice President Sandy Saemann. Each agreed to annual pay caps of approximately $5 million under their new contracts.
Separately, L.A. Gear said its sales exceeded $150 million in its fourth quarter ended Thursday, up from $63.9 million in the same period a year earlier. For the year, the company's sales exceeded $600 million, up more than 168% from last year.
Marina del Rey-based L.A. Gear also reported that its incoming orders for the fourth quarter amounted to a record high of approximately $306 million.
L.A. Gear is the nation's No. 3 athletic footwear maker, behind Nike and Reebok.