Cruising through Ralph Lauren’s proxy…

June 28, 2011

It has been a heady few months for Polo Ralph Lauren Corp.’s (RL) shareholders, with the stock price up almost 64% from its trading price a year ago and the quarterly dividend, declared just last week, at 20 cents a share, twice last year’s amount.

But things are looking pretty rosy for Ralph Lauren and his family members, too, judging by the preliminary proxy that the company filed June 23.

How did Ralph himself fare? Well, in FY 2011 he received total compensation valued at more than $29.7 million; that’s more than $2 million higher than last year. His base salary held steady at $1.25 million, with the bulk of his compensation coming from $19.5 million in non-equity incentive compensation, nearly $5.64 million in stock awards, and $2.98 million in stock options.

Ralph also got almost $332,000 in “Other compensation,” which consisted of perks and benefits such as $68,966 in supplemental medical expenses, $61,456 for his personal use of an automobile and driver, $200,000 for his personal use of the Corporation’s aircraft and enhanced travel accident insurance, and a bit more for consulting services and merchandise discounts.

That’s a lot of money for most of us, but it’s nearly $344,000 less than the shareholders paid for Ralph’s perks last year. We are given this explanation in the proxy:

“Reduction in the Corporation’s Reimbursement for Mr. Lauren’s Use of Private Aircraft. Commencing in fiscal 2011 and continuing for the remaining years of his employment agreement, the Corporation will no longer provide Mr. Lauren with unlimited reimbursement for expenses incurred as a result of his use of private aircraft for personal travel; such reimbursements shall be limited to a maximum of $200,000 per year (which represents an approximate 60% reduction from the amount reimbursed for fiscal 2010).”

The proxy states elsewhere that the company requires Ralph “to use a private aircraft for security purposes for any travel.” Lauren has his own plane, and apparently when he’s not using it, other executives sometimes fly on it for company business; that led to the company writing a check to Ralph for $117,631 – based on market rates – for the use of his plane.

As for other related parties on the company payroll, this isn’t a new arrangement. In fact, we dug through our archives and found that in July, 2006, Michelle wrote a post which observed that Ralph’s brother (Jerome) and son (David) worked for the company, but there was no mention in that year’s proxy of how much each relative was paid.

This year’s proxy offers answers, though: For fiscal 2011, Jerome, the Executive Vice President of Menswear Design, got a base salary, bonus, and other compensation worth more than $2.155 million, plus stock awards valued at more than $391,000. The company also “…transferred a vehicle valued at $67,500 to [Jerome], for which he paid ordinary income taxes associated with such transfer.”

Meanwhile, Ralph’s son, David Lauren, the Executive Vice President of Global Advertising, Marketing and Communications, received $1.168 million in salary, bonus and other compensation, together with stock awards worth more than $391,000.

There’s no mention of the company transferring any cars to Ralph, like it did to Jerome, but – then again – a car worth a measly $68,000 probably isn’t the kind of car Ralph would waste his time on, judging by his car collection, which is currently featured in an exhibit at the MusâŸe des Arts DâŸcoratifs in Paris through August 28.

Image source: MusâŸe des Arts DâŸcoratifs

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