L Brands

Proxy published: 04/09/15

Annual meeting: 05/21/15

Total compensation for L Brands CEO Leslie Wexner increased 52% to $24,094,036. A major component of the increase was provided through an increase in his cash incentive to $6,342,273 million dollars, although stock awards and options awards also increased.

One concern shareholders may have is that there are two bonus opportunities at L Brands each year. It is very unusual to have six month goals rather than annual awards. This may lead to an extremely short range focus.  The company states that it has, “Set short term incentive compensation goals at targets that require substantial growth in operating income over record fiscal 2013 results” and the results were achieved.”

However, retail consumers are notoriously fickle regarding brand names. Opinions and shopping practices seem to change constantly.  For this reason, a particular tie to long term equity should be an important component of pay at consumer brands.

The bonus this year is nearly $4 million above last year’s, a significant cash payment. Based on a survey of early proxy filings done by the Hay Group and published by the Wall Street Journal, this is one of the hot trends of the season. According to the article, of the companies looked at, “Cash was the fastest-growing component of pay for the surveyed CEOs last year. Their salaries and annual bonuses rose by a median 7.8%, up sharply from the previous year’s 1.2% and a decline in the year before that.”

Of course, cash is always in style. The question is whether shareholders will be satisfied with the pay ensemble compiled at L Brands this year.