Lululemon Athletica's earnings beat analyst expectations. From $2 million to $11 million, here's how much the athletic wear giant pays its executives.
- Sales continued to grow for Lululemon Athletica according to its third quarter results, with a 28% increase in net revenue compared to the third quarter of 2019.
- In 2019, the athleisure maker paid its executives between $2 million and $11.3 million. For most Lulu executives, long-term awards made up more than half of total reported compensation.
- The athleisure firm has seen sales soar as the pandemic increased demand for stay-at-home wear.
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Quarantine has been a success for athleisure brand Lululemon Athletica — comfy work-from-home attire and the at-home fitness boom have fueled sales during the pandemic. Third quarter results showed a 28% increase in revenue when compared to the third quarter of 2019, with revenue at $1.1 billion.
At the helm of the company is CEO Calvin McDonald, who made his career at Sephora — his last role at Sephora was CEO of Sephora America's. He joined Lulu in mid-2018, after former CEO Laurent Potdevin resigned for "falling short of the company's standard of conduct."
McDonald and the other executives are paid well for their leadership at the athleisure firm. Let's break down Lulu's executive compensation.
Compensation for McDonald and other executives
Compensation for Lulu executives ranges from $1.9 million for the firm's chief technology officer Julie Averill to $11.3 million for McDonald. McDonald's total reported compensation in 2019 was more than twice that of any other individual executive — the highest compensated executive other than McDonald was Michelle Choe, Lulu's chief product officer, who made $4.4 million in total reported compensation.
For most Lulu executives, equity made up a majority of total reported compensation.
In the chart below, we show compensation for each executive as it was presented in the summary compensation table in Lululemon's proxy statement, split out by element. Hold your cursor over the labels at the top to highlight the different parts of the executives' compensation, and reference the bulleted list below for more information on each compensation element.
Lululemon's executives' stakes are small, but its founder still holds a lot of shares
Lululemon founder Dennis Wilson owns 10,706,108 stock shares in the clothing company, making up 8.2% of the firm's voting power and worth $4 billion as of market open December 9. Compared to Wilson, other individual shareholders' stakes are small, but still worth millions.
Among those other shareholders, McDonald's stake is the largest, worth almost $19 million as of market open December 9. Other stakes, as valued at market open on that day, are as follows:
- Celeste Burgoyne: $12,446,465
- Michelle Choe: $6,085,038
- Julie Averill: $2,543,672
- Patrick J. Guido: $1,793,528
- Stuart Haselden: Mr. Haselden is the firm's former chief operating officer, and resigned January 10, 2020. As of April 1, 2020, Lululemon has no information about his share ownership.
What the terms in the chart mean:
- Salary: The salary an executive earns in a given year.
- Stock awards/option awards: Equity awards based on achievement within a firm's long-term incentive plan. Long-term incentives are also considered "at-risk" pay. Stock and option awards are two different types of equity awards — stocks are direct equity awards, while options give the executive the right to buy shares at a specific price.
- NEIP: Typically cash grants for performance in the short term. Bonuses are typically one-off awards, while anything in the column titled NEIP (nonequity incentive plan) typically means the awards are granted as part of a firm's short-term incentive plan and granted in cash (hence the "nonequity" label). Short-term incentives are thought of as part of "at-risk" pay, meaning that the executive must hit goals or benchmarks to receive the award.
- Other compensation: This number includes any value from the compensation data related to pension plans or nonqualified deferred-compensation earnings. It also includes any payments designated as "other compensation," which can include payment for things like personal or home security, employees' benefits plans, country-club fees, fees related to use of company aircraft, and even relocation expenses.
- Total compensation: All amounts summed.
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