Just a little off the top, please….

September 11, 2008

Unless you looked at the proxy that Regis Corporation (RGS) filed Tuesday, there might be some initial confusion about whether that directive is coming from a salon customer or one of the company’s executives. Based on Tuesday’s filing, good money says it’s the latter.

In the fiscal year that ended June 30, 2008, Chairman/President/CEO Paul Finkelstein’s total compensation was down slightly from the previous year, but he still managed to get a raise, despite Regis’s stock falling nearly 30% during the fiscal year.

Regis, which owns Supercuts, Sassoon, and many other salons in the U.S. and abroad, has never been famous for its frugality. Footnoted regulars may remember Michelle’s previous posts about Regis’s principals— cozy familial business transactions (such as this and this), as well as the report about its speedy entrance into — and then exit from — the beauty school business. The related-party stuff is still going strong too, with Finkelstein’s son, Michael, receiving close to $500K last year for selling insurance policies paid for by the company. And Vice Chairman Myron Kunin’s son, Timothy, who supplies the company with magazines, saw company-related revenues increase nearly 40%. The increase seems particularly odd, given magazine industry trends.

The compensation and side deals also seem especially generous when viewed in the context of the company’s recent performance. Less than a month ago, the AP reported that Regis’s fourth-quarter profits —declined 17 percent amid weakened consumer business.—¯Regis also recorded a fourth-quarter write-off of $4.5 million, a charge that stems from the company’s plan to close —as many as 160 salons in regional malls, strip malls and in Britain that have been turning in weak sales.

Yet, in the exhibit to the 8-K Regis filed on Aug. 20, Chairman/CEO Paul Finkelstein was unusually bullish: —Regis is well positioned and I am more bullish today, for the long term, than I have been in over four years. We are in the quintessential replenishment business offering affordable services and products. Our strategy of moderately increasing service prices is working and we plan to continue this strategy for the next several years.

Finkelstein’s comments almost remind us of what our friends say when we get a bad haircut: “It’s not really that bad. Besides, it will grow back soon enough!”

Image Source: Regis Corporation

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