Reebok Chairman Agrees to $11 Million Pay Cut
STOUGHTON, Mass. (AP) _ The man who amassed great wealth by overseeing Reebok’s rapid growth from a small shoe company into a trend-setting athletic apparel giant will take a pay cut of more than $11 million next year.
But Paul Fireman still will be able to afford expensive footwear like Reebok’s $170 sneaker, ″The Pump.″ His new deal with the company could pay him $2 million a year in salary and bonuses.
The company announced Thursday that a new five-year deal would pay Fireman, its 46-year-old chairman and chief executive officer, $1 million a year in salary and the potential for another $1 million in annual bonuses based on the company’s profits.
His current agreement, which expires Dec. 31, brought Fireman an average of about $13.6 million annually for the past four years. More than 95 percent of that was in bonuses based on the company’s pre-tax earnings, the rest in salary, said Ken Lightcap, Reebok’s vice president for corporate communications.
His reduced compensation ″is really not a surprise,″ said Heidi R. Steinberg, an analyst with Salomon Brothers. ″It was pretty well known that he would be taking this pay cut.″
Steinberg said Reebok’s earnings growth was probably not foreseen when the original pay package was negotiated.
Reebok’s sales jumped from $300 million in 1985 to $1.822 billion last year, and its net income rose from $38.9 million to $174.9 million during the same period, Lightcap said.
The new deal also gives Fireman the option of buying 2.5 million shares of Reebok common stock at an average price of about 18 percent above the current price. He can exercise the option for 10 years from the starting date of the agreement.
Fireman attended Tuesday’s board of directors meeting at which the new deal was approved but was on vacation Thursday and not available to comment, Lightcap said.