Vendors Maintain Pay in Uncertain Climate

By James Mammarella -- Home Textiles Today, 10/29/2007 12:00:00 AM

New York — —

New York —Pity the poor manufacturer… but don't spare too much pity for the manufacturing executives.

While publicly held vendor companies in the U.S. home textiles industry suffered a range of setbacks and dislocations during 2006 – Crown Crafts thrashed through a painful restructuring, Mohawk shares lost 5% of their value, polyester maker Wellman's shares lost 50%, and Quaker Fabric edged toward bankruptcy and liquidation — the top executives at these companies had ample take-home pay.

In fact, 10 of the vendor execs in this year's report earned more than a half-million dollars in total cash compensation — while only six had reached that level in 2005.

Three Mohawk bigs took home more than $1 million: ceo Jeffrey Lorberbaum, coo Christopher Wellborn, and Unilin division president Frans De Cock.The Mohawk execs' personal success varied when compared to the fortunes of the company over the past three years. While Mohawk, on the acquisition trail, saw sales climb 34.4% and income grow 23.7% during that time frame, the change in total compensation of top execs ranged from the 102.8% gain of Wellborn — who easily led all vendor increases for the period — to the seemingly more modest gain of 11.0% for Lorberbaum. However, ceo Lorberbaum's compensation was of rather heroic stature to begin with.

Crown Crafts executives, by contrast, saw their compensation rise over three years by 62.7% (chairman, president and ceo E. Randall Chestnut) and 36.7% (infant products division president and ceo Nanci Freeman) — while the company's income zoomed 211.8% in the throes of a business turnaround, one that saw sales fall 14.2% over the period.

Downward pressure on vendor companies in 2006 was evident only in the lower ranks of the salary portion of compensation. While the top five salary earnings were roughly equivalent year-to-year, the bottom five saw an aggregate 36% cut in salary, to a group total of $993,000 from $1.54 million a year ago.

Conversely, both bonuses and the value of stock options exercised increased, on average, for everyone at the top and bottom — with the exception of Mohawk's Lorberbaum, absent from this year's options top five, but who took home his options windfall, to the tune of $7.5 million, the year before.

VENDORS 3-YEAR SALARY VS. EARNINGS COMPARISON

EXECUTIVE COMPENSATION VENDORS
dollar amounts in thousands

VENDOR SALARIES
Top and bottom 5 vendors by 2006 salary*

VENDOR CASH BONUSES
Top and bottom 5 vendors by 2006 bonus

VENDOR STOCK OPTIONS EXERCISED
2006 stock options exercised