It’s good to be king…

July 9, 2007

images1.jpegAfter a brief respite from the filings, it’s sometimes hard to know where to begin. But the proxy filed late Friday by clothing company Cherokee (CHKE), whose brands include Cherokee and Carole Little, immediately rose to the top. That’s because Chairman and CEO Robert Margolis managed to walk away with an $8 million bonus, which is more than twice the bonus he received in fiscal 2006. During the year, the stock climbed by just over 20%.

But it’s not the money so much as the way the compensation committee chose to describe the bonus. At a time when many companies are going into great detail to explain their rationale for the various parts of compensation, Cherokee took a decidedly more minimalist approach. Their compensation committee report consisted of these three sentences:

The Compensation Committee establishes and oversees the design and functioning of the Company’s executive compensation program. We have reviewed and discussed the foregoing Compensation Discussion and Analysis with the management of the Company. Based on this review and discussion, we recommended to the Board of Directors that the Compensation Discussion and Analysis be included in our Proxy Statement for the 2007 Annual Meeting.

That explains it all, right? But, wait. It gets even better. While Margolis’ bonus more than doubled, the other four top execs listed in the summary chart mostly saw their bonuses drop. For example, Howard Siegel, who’s listed as President — Operations, received a $290K bonus in 2006, but only got $80K bonus for fiscal 2007. The proxy doesn’t provide many details on exactly what Siegel does day to day, but one has to wonder how content he and the three other top executives are to receive a fraction of what Margolis got. And investors have to wonder why Cherokee’s proxy lacks some of the basic details that are found in those put out by most other companies. Granted, Margolis owns 12% of the outstanding stock (down from 14% a year earlier), but pretending to be king isn’t a good enough reason to skimp on the details.

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