Avon's CEO got no cash bonus in 2005
The world's largest direct seller of beauty products also laid out
plans for executive incentives for 2006 and 2007 based on the company's
Chairman and Chief Executive Andrea Jung's annual salary was set at $1.375 million in March 2004.
compensation committee of Avon's board said in January that Jung and
other officers should not get bonuses for 2005 because the company did
not satisfy its performance measures.
Avon, whose brands include Anew and Skin-So-Soft, has pegged 2006 as a transitional year as it works to improve its results.
unveiled a restructuring plan in late 2005 that includes cutting 20
percent to 30 percent of its management jobs, increasing advertising
spending, and exiting some operations. The company was pressured last
year as lower-income consumers curbed purchases and competitors rolled
out new skincare products.
Jung's incentive bonus target for 2005
was 175 percent of her base salary and was linked to certain
performance objectives under an executive incentive plan. Due to the
company's performance, she did not receive a bonus under that plan. In
2004, her bonus under the executive incentive plan was just over $2.3
Jung was awarded a stock option grant of 675,000 shares in
March 2005. Those options vest in three equal annual installments that
began on March 10, 2006. Options awarded to Jung accounted for 9.2
percent of all of the options Avon granted to its employees in 2005,
according to the company's filing.
Including the stock options,
perquisites such as financial planning and other personal benefits,
Jung's total compensation in 2005 was $7,630,017.
As disclosed in
January, the only 2005 bonus awarded at the executive level went to
Gilbert Klemann II, Avon's general counsel, who received a cash bonus
of $30,000. His bonus in 2004 was $336,995.
Avon said that on March 27, its board's compensation committee set the 2006 annual cash bonus performance goals.
committee also approved a 2006-2007 turnaround incentive plan to focus
key executives on new objectives. Actual payouts under that plan go up
to 200 percent of the target award, depending on whether operating
profit measures and initiatives under Avon's turnaround plan are met.
Target awards were set at 67 percent of the average of earned base
salary for 2006 and 2007.
The committee also approved a grant of
equity-based awards for Jung, effective March 31. The grant is
equivalent to 500 percent of her base salary, with 50 percent in stock
options and 50 percent in restricted stock units. The restricted stock
units fully vest on the third anniversary of the grant date, as long as
cumulative revenue and operating profit performance measures are met
from fiscal 2006 through 2008, Avon said.