Reebok Chairman to Take a Pay Cut - to $2 Million a Year
STOUGHTON, Mass. (AP) _ Reebok’s board of directors let the air out of chairman Paul Fireman’s huge pay package, cutting it by more than $11 million under a new five-year deal, the company announced Thursday.
Fireman, who was paid nearly $55 million during the past four years, will receive no more than $2 million in annual salary and bonuses under the agreement that begins in January.
Fireman, a key to the company’s growth into a footwear giant that sells ″The Pump″ athletic shoe for $170, received an average of $13.6 million during each of the past four years. Under that contract, Fireman, 46, was getting a percentage of the company’s pretax earnings.
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, said Ken Lightcap, head of corporate communications.
The new agreement was reached at a board meeting attended by Fireman Tuesday. He was on vacation Thursday and not available for comment, Lightcap said.
In its rankings of the pay of U.S. chief executives according to salary and bonuses, Forbes Magazine listed Fireman fifth last year and fourth this year.
″His compensation before was much higher than is normal ... largely due to the fact that a lot of his compensation was tied to earnings levels of the company,″ said Elizabeth A. Armstrong, an analyst with Prescott Ball and Turben.
She added: ″I would not be surprised if he was one of the people who arranged″ the new, reduced compensation level. The new agreement will save the company about six cents a share after tax, she said.
The agreement provides Fireman with a $1 million annual salary, roughly double his current salary, and a bonus of no more than $1 million a year based on reaching profit goals.
″I don’t imagine he’ll have trouble buying that new car,″ Armstrong said. The deal also gives Fireman the option of buying 2.5 million shares of stock at an average price of about 18 percent above the current price.