Zumiez filed its proxy yesterday and I was intrigued by how the growing retailer pays its top executives.
First, because the company struggled last year, like many other retailers, none of the senior management team received bonuses and none will receive a raise in base salary in 2009.
I was also struck by the relatively modest salaries of CEO Rick Brooks and Chairman Tom Campion, and how their salaries are in the same range as most other Zumiez executives and lower than the company president.
Tom Campion's and Rick Brooks' base salaries for fiscal 2008 were $262,500.
Lynn Kilbourne, president and general merchandising manager, had a base salary of $350,000, though she was paid $315,369 for the year because she was promoted to president in September and did not receive a full year of compensation at her new rate.
Chief Financial Officer Trevor Lang had a base salary of $262,500, the same as the CEO and Chairman.
Ford Wright, the executive vice president of stores, had a base salary of $225,000.
When stock options and awards, signing bonuses and other employee compensation, including 401(k) contributions and merchandise discounts, are included, Campion and Brooks made significantly less than the rest of their management team.
Tom Campion: $267,509
Rick Brooks: $268,226
Lynn Kilbourne: $811,394
Trevor Lang: $941,292
Ford Wright: $597,894
Campion is Zumiez largest individual shareholder, owning 18.8 percent of Zumiez' common stock. Brooks owns 12.4 percent.
The value of their holdings has dropped significantly in the last year. On April 21, 2008, Campion's stake was worth $100.5 million. Yesterday, it was worth $61 million.
Brooks' stake this time last year was worth $66.5 million. Yesterday it was worth $40.3 million.
Given the changed economic environment, the compensation committee has changed its criteria for bonuses in 2009. Most of the goals are around preserving the company's capital position. Senior executives will be eligible to receive bonuses of up to 20 percent of their base salaries if certain thresholds are met.
Another interesting element of the proxy is the great detail provided about how the company and the board judges performance of its senior management team and what qualities the company values.
Here is a small sample of the overall compensation philosophy for Zumiez executives. The italics are theirs.
"In structuring a competitive opportunity for each executive officer, the committee evaluates and takes into account the total stock accumulated and owned by the executive as a result of equity-based award plans. The committee believes that at-risk components should result in compensation for the executive only if justified by performance.
"For Zumiez executives, ‘performance' means, first of all, doing the right things - building the culture and achieving the financial results that clearly drive the creation of shareholder value. The compensation program must align the interests and motivations of executives with those of shareholders.
Secondly, performance means doing things right - acting as strong, respected and acknowledged leaders of staff; and, as role models of leadership behavior in the community at-large. We believe that exemplary executive behavior supports sustainable long-term creation of shareholder value."