Gap CEO Glenn Murphy received compensation worth nearly $6 million in 2010, an 18 percent increase from the year before, according to an analysis by The Associated Press.
Most of the increase came from a one-time bonus and stock awards. Murphy didn’t receive any stock awards the year before.
Murphy, 49, received a base salary of $1.5 million in the fiscal year that ended Jan. 29, according to a recent filing by the clothing chain with the Securities and Exchange Commission.
He also received a bonus of $635,000 last year after getting none the year before. The company said that bonus was partly because Murphy voluntarily took a $225,000 pay cut in 2009, which was restored in 2010. Gap also said it because the company’s financial performance was well above expectations in 2009 amid the severe economic downturn.
Murphy, however, saw his cash performance bonus fall to $1.7 million, half of what he received in 2009. Murphy’s stock awards were valued at $1.8 million in 2010.
He also received other compensation worth $280,937 in 2010, a 70 percent increase from 2009. Perks included $105,313 for personal use of airplane, and $100,000 as part of a gift matching program for nonprofit organizations.
Murphy, who has been CEO and chairman since August 2007, volunteered in 2009 to reduce his salary by 15 percent to just under $1.3 million, which also reduced the amount he was eligible to receive under the company’s annual bonus program.
Gap, which operates stores under its namesake chain as well as Old Navy and Banana Republic, posted net income of $1.2 billion in the latest fiscal year, from $1.1 billion in the prior year. Revenue increased 3 percent to $14.66 billion.
The company posted a 1 percent increase in revenue at stores open at least a year, compared with a 3 percent decline the year before. The measure is considered a key indicator of a retailer’s health. While the company’s namesake chain has a way to go to turn around it business, Banana Republic and Old Navy both have seen business steadily turn around.
Over the past year, the company opened its first stores in Italy and China and expanded its online presence to more than 90 countries, including the launch of sites in Canada, Europe and China.
The company has also remodeled Old Navy stores with the goal of having nearly 400 in the new format by the end of the current fiscal year.
The Associated Press formula calculates an executive’s total compensation during the last fiscal year by adding salary, bonuses, perks, above-market interest the company pays on deferred compensation and the estimated value of stock and stock options awarded during the year. The AP formula does not count changes in the present value of pension benefits. That makes the AP total slightly different in most cases from the total reported by companies to the Securities and Exchange Commission.
The value that a company assigned to an executive’s stock and option awards for 2010 was the present value of what the company expected the awards to be worth to the executive over time. Companies use one of several formulas to calculate that value. However, the number is just an estimate, and what an executive ultimately receives will depend on the performance of the company’s stock in the years after the awards are granted. Most stock compensation programs require an executive to wait a specified amount of time to receive shares or exercise options.
