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The highest-paid apparel suppliers list is derived from a broader survey of executive pay in the apparel, retail and consumer products industries by the financial editors of WWD and the Fairchild News Service. Year-over-year, the apparel vendors saw their average total annual pay rise 11.7 percent, according to the pay report. The gain was driven by a 12 percent increase in average bonuses as well as an 8 percent gain in executive base pay. An analysis of the results also show that more than one-third of the vendor executives received total annual pay of more than $2 million, while 18 percent of the executives had annual pay packages of more than $3 million.
"The base salaries and bonuses are typically commensurate with companies' performance, so executives have plenty of incentive to further increase those financial results," said Terre Simpson, president of Simpson Associates, a retail, apparel and fashion executive search firm in Manhattan.
Compared with retail executives, on average, the vendors garnered higher total annual pay. The average total annual pay (not including long-term payouts and stock options) for retail executives was $1.2 million in 2004, which compares with $1.8 million for the vendor executives. Regarding bonuses, the vendor executives were awarded an average bonus of $974,000, which is well above the retailers' average bonuses of $552,000.
Simpson said the reason for the difference between retailers and vendors is because the overall corporate structure of a retail operation requires tighter margins and higher expenses. Retail gross margin rates range from about 7 percent (for dollar stores, discounters and mass merchants) to 30 or 40 percent (for specialty and department stores). This compares with 20 to 60 percent gross margin rates of vendors and manufacturers.