WWD List: These Are the 25 Highest-Paid Executives in Fashion

Get ready for some big numbers.

A WWD study of executive pay at fashion’s top companies turned up 25 bold-faced names in retail, fashion and beauty who made more than $10 million last year, including salary, incentive pay, the value of stock and option awards, pension and perks.

At the top of the list is Patrice Louvet, the new chief executive officer of Ralph Lauren Corp., who pulled in $23.8 million. Doug McMillon, ceo of Walmart Inc., and Ralph Lauren himself also saw compensation packages of more than $20 million.

But the numbers can be misleading.

Louvet’s take at Ralph Lauren, for instance, included a salary of $937,500, a $3.4 million bonus, other incentive pay of $4 million and $144,345 in additional compensation, including perks such as $35,141 for a car service.

But the bulk of his pay came in stock awards, valued at $15.3 million. And just over half of those stock awards, $8.4 million worth, were a grant to make up for compensation lost when he left Procter & Gamble after 28 years.

Stock-based pay is tricky. Regulators require that it be recorded at fair value as of the grant date, assuming no risk of forfeiture. But with stock price fluctuations and vesting schedules, there is often risk that’s structured in a way that executives gain only if things go well.

It’s a nuance that can be lost in the total numbers. And lingering confusion around stock-based compensation is just one strain in a debate that’s rekindled each year as executive pay details trickle out in regulatory filings of public companies.

Team Big Pay argues that the stock-based pay is aspirational at best and only worth anything if the corporate titan delivers for the shareholder. Besides that, they say the c-suite denizens have very special skills, are worth every penny and are being paid a market rate. And why should the board, which oversees executive pay, quibble over a few million here or there when there’s a multibillion-dollar enterprise to run?

Team Little Guy sees things far differently, arguing that these executives, however talented and hard-working, would still work for much less and are simply not that astronomically more valuable to the company than the average worker. And when their strategies fail, workers crash-land while executives usually float easily down under golden parachutes.

The social justice-tinged debate can be heated, but there’s also acknowledgment that it flows from a system that includes compensation consultants, pay norms across industries, a relatively small pool of potential applicants that investors will be happy with, big personalities on all sides and so on.

“Everyone wants to believe their ceo is far above average, so you look at the average and you pay them far above average,” said Larry Mishel, distinguished fellow at the Economic Policy Institute and a critic of executive pay practices. “So if everybody’s doing that, then everybody has to do it.

“I believe that we could cut ceo compensation in half and the economy would not shrink one iota,” Mishel said, suggesting that tax polices could be used to encourage less-exorbitant pay.

“It’s hard, you have to go against a market that’s kind of been set irrationally,” he said.

Others have argued that the market, in fact, works in this case.

John Dobson, finance area chair at California Polytechnic State University’s Orfalea College of Business, offered up a moral and economic defense of executive compensation in a paper published in the Business & Professional Ethics Journal.

Dobson argued that pay cannot be looked at on its own, but as a facet of a larger belief system holding that executives should be measured by how much they maximize shareholder wealth.

“[Executive compensation] may be seen as a gamble on the part of shareholders that the ceo or other senior executives will increase firm value by just a few percent which…would for an average Fortune 500 company represent hundreds of millions if not billions of dollars,” he said. “Conversely, the downside of this gamble is small.”

But a part of the downside is that pay packages that reach into the eight-figure range cast a bright light on the compensation divide and stir up resentment.

At Walmart, for instance, McMillon’s pay package amounted to 1,188 times the $19,177 earned last year by the employee who stood at the median of the company’s pay scale, minus the ceo’s pay. (Public companies were required to report the ratio for the first time this year, but each used their own standard, making it hard to compare one with the next).

Kit Yarrow, a consumer psychologist at Golden Gate University, noted: “Executive compensation is the source of so much angst that we share in our country today. It’s just widely publicized, the disparity between the c-suite employees and the rest of the employees.”

She said the divide can seem more Victorian than modern and that big pay packages are simply difficult to understand.

“When you don’t understand a thing and you can’t figure out for the life of you why something is going on, that’s the recipe for anger,” Yarrow said.

But she said that anger is better directed at the system that has inflated pay than the executives themselves.

Hate the game, not the player.

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