John Idol, chairman and chief executive officer of Capri Holdings, saw his pay package shrink by 26.5 percent to $10.5 million last year as the company struggled with declining sales and profits.
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But Idol, who formed Capri around Michael Kors by adding Versace and Jimmy Choo, stands to do better if the company’s $8.5 billion buyout by Tapestry Inc. successfully overcomes a lawsuit from the Federal Trade Commission, which is challenging the deal on antitrust grounds.
Idol’s salary last fiscal year remained the same at $1.4 million, but his incentive pay fell to $540,000 from $4.3 million the prior year. As is typical for public-company executives, the bulk of Idol’s pay came in the form of stock awards, which were valued at $8.5 million when they were granted.
“Our executive compensation plan design emphasizes pay for performance and is designed to promote responsible pay and governance practices that align with the interests of our shareholders,” Capri said in its proxy statement filed with the Securities and Exchange Commission.
“Overall, we were disappointed with our fiscal 2024 performance which was below our expectations,” the company said, referring to an 8 percent decline in revenues to $5.2 billion last year and a 49.7 percent drop in adjusted net income, to $413 million.
Usually, executives have to wait for their stock awards to vest before they can get any value from them, but if the deal with Tapestry does go through and Idol is pushed out under the new structure, he’s in line for a $27.5 million payout.
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That would include an $11.3 million in cash severance, $540,000 in incentive pay and $15.6 million from the vesting of long-term incentives.
Just how likely a deal is to pass remains an open question — and one that will ultimately be answered by Judge Jennifer Rochon in Manhattan federal court.
For their part, investors are hesitant. Shares of Capri were up 1 percent to $33.62 in midday trading on Friday, well below the purchase price of $57 agreed to by Tapestry, which owns Coach, Kate Spade and Stuart Weitzman.
The FTC has argued that consumers would lose the benefit of head-to-head competition if the companies were combined and formed one larger player in the accessible luxury market.
Regulators have also said: “The proposed acquisition is also part of Tapestry’s pattern and strategy of serial acquisitions….The proposed acquisition builds on a deliberative, decade-long M&A strategy by Tapestry — and is just one in a string of acquisitions for Tapestry to achieve its goal to become the major American fashion conglomerate .”
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