Gap Inc. announced Wednesday that its chairman and CEO Glenn Murphy has volunteered to take a 15 percent cut in his salary this year as part of a series of moves aimed at cutting costs amid the pullback in consumer spending.
The clothing chain, which operates its namesake stores as well as the Old Navy and Banana Republic chains, also said that it is reducing the number of board members it has from 13 to 10 and is cutting both their annual cash payment and stock compensation by 15 percent.
San Francisco-based Gap said it is also eliminating merit-based salary increases for most employees based at its headquarters.
As part of the changes, two board members — Howard Behar and Penelope Hughes — agreed not to seek new terms in May at the annual meeting. In addition, company co-founder Doris Fisher will not to stand for re-election and will assume the role of honorary lifetime director.
"This is an appropriate time for us to look at the size and structure of our board of directors," Murphy said in a statement. He added that Fisher will be involved with the company in a way that allows her to remain an "inspiring role model" for its leaders and employees.
Murphy, hired to take Gap's helm in July 2007, received a compensation package valued at $39.1 million for fiscal 2007 — most of it in stock grants tied to the company's future performance, according to calculations by The Associated Press. As part of his compensation, Gap paid Murphy $2.1 million in bonuses, including $1 million for taking the job, to supplement his $755,769 salary for a half year's work. Murphy's compensation for fiscal 2008 has not been released yet.
The Associated Press calculates executive pay based on salary, bonuses, incentives, perquisites, above-market returns on deferred compensation and the value of stock options and other awards granted during the year. This figure may differ from the total compensation that companies list in their proxy statements.
Gap reported last month that its fourth-quarter profit fell 8.3 percent to $243 million, though the results beat Wall Street's forecasts because of its focus on cost controls.
In the fiscal year that ended Jan. 31, Gap reduced its operating expenses by $478 million.
Sales for the quarter fell almost 13 percent to $4.08 billion. Sales at stores open at least a year, known as same-store sales, dropped 14 percent for the quarter. They fell 13 percent at Gap North America stores, 15 percent at Banana Republic North America and 17 percent at Old Navy. Gap Inc.'s international business fell 4 percent.
Shares of Gap rose 24 cents to close at $12.45 per share, the low end of its 52-week range of $9.41 to $21.89.
Source: AP News