Gucci chiefs to reap $390m

November 8, 2001 Posted: 1150 GMT

LONDON (CNN.com) -- Top executives at fashion house Gucci could make more than $390 million from share options.

Gucci creative director Tom Ford and chief executive Domenico De Sole would be by far the largest beneficiaries of the scheme which promises to make them among the highest paid executives in European corporate history, The Financial Times reported.

Ford, 39, could end up with about $150m and De Sole $75m.

Gucci says its turnaround under the two executives justifies their remuneration and vindicates its use of equity incentives.

It nearly failed in 1993, but went public in 1995 and is now worth $8.4bn. Since flotation, Gucci has provided compound annual growth in total shareholder return of 24.6 per cent, against 12.5 per cent for the S&P 500.

Registered in the Netherlands, with listings in Amsterdam and New York, Gucci does not disclose individual remuneration. But its annual reports provide aggregate information on its share options grants.

"The methodology used to calculate these numbers is transparent and fair: we don't have a problem with them," Gucci said. "But it is not a requirement of the jurisdiction in which we are regulated to publicise details of executive pay and we do not feel the need to do so."

Under the terms of a deal agreed in September with France's Pinault-Printemps-Redoute, Gucci minority shareholders will receive a bid from the retail group at $101.50 in March 2004. The deal ended a 2-1/2 year legal battle between PPR and Moet-Hennessy Louis Vuitton for control of Gucci.

Although Bernard Arnault, chairman of LVMH, has decribed the options as "monstrously disproportionate", some other minority shareholders argue it has fairly rewarded Ford and De Sole and helped the company attract more leading designers into the Gucci stable.