Guess Inc., the largest Los Angeles-based clothing maker, cut the compensation of its top executives last year because the designer-jeans maker failed to meet financial goals.
The company paid Chairman and Chief Executive Maurice Marciano $959,200 in 1997, with no bonus. That's 72% less than the year earlier, when he made $3.44 million, including a $1.68-million bonus.
His brothers, company President Paul Marciano and Senior Executive Vice President Armand Marciano, also did not receive bonuses last year, according to a proxy filing with the Securities and Exchange Commission.
The pay cuts came as Guess shares fell more than 50% during 1997 and as the company posted net earnings--before a one-time accounting charge--of 78 cents a share, well below the per-share target of $1.27 needed to trigger executive bonuses.
Guess shares closed Thursday at $6.75 on the New York Stock Exchange, down 19 cents for the day and well below the $18 price set when the company went public in August 1996.
"Once you are a public company, your bonus plan should be an incentive plan," said Terence Tsang, a Guess spokesman. "I think that's fair. If the company is not doing well, they shouldn't get a bonus."
In January, when Guess announced that it would post at best a break-even fourth quarter, the disappointing results were blamed on lackluster wholesale sales, weak retail sales stemming from a labor union publicity campaign against the company and lower-than-expected revenue from licensing, particularly in Asia.
Though the pay cut is somewhat unusual in this era of rapid escalation for executive compensation, it is hardly unprecedented.
After last year's $178-million loss, Boeing Co. directors cut 1997 bonuses by 30% to 56% for its top company officials and froze their base salaries for 1998.
Judith Fischer, who publishes the Virginia-based Executive Compensation Newsletter, said that based on data from 1996 and initial information from 1997, 84 of the 1,000 firms her company tracks withheld bonuses from key executives, many because performance goals were not met.
Fischer said were it not for the booming national economy, that number would have been higher.
Among the firms cited were America Online, which last year was beset with Internet-related growing pains; agribusiness giant Archer-Daniels-Midland Co.; retailers Best Buy, Payless Cashways and Dollar General Corp.; and Fluor Corp., the Irvine-based engineering services firm.