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2000 CFO Pay: Former Penney CFO Received $2.1 Million in Severance

Also, Hotjobs CFO received $125,000 bonus.
Michelle GabrielleApril 12, 2001

Former J.C. Penny Co., Inc. CFO Donald A. McKay took home more than $2.2 million in “other compensation” in his last year at the Plano, Tex.-based retailer, according to the company’s recently released proxy.

Most of it came from a severance agreement while $71,492 was from vacation pay, and $59,685 from consulting services.

The severance alone amounts to about three times his salary and bonus for 2000, which came to $366,490 and $338, 315 respectively.

McKay’s total Compensation for 2000 came to $2,984,642.

In 1999, McKay earned $368,100 in salary, $8,884 in bonus, and $7,567 in other compensation. Total Compensation: $384,556.

McKay, 55, retired from J.C. Penney on December 31, 2000, less than one month before the struggling retailer announced a major restructuring.

He was replaced by Robert B. Cavanaugh, 49, who had served as CFO of Eckerd, a J.C. Penney subsidiary. Cavanaugh has had over 20 years experience at J.C. Penney in a variety of financial assignments, including manager of financial planning and treasurer.

On the same day that Penney changed CFOs, it made a number of other executive changes, including naming a new chief information officer.

In late January, the company announced a major restructuring, including store closings, which were expected to result in a charge of approximately $275 million on a pre-tax basis, or about 68 cents per share after-tax, in the fourth quarter ending January 27, 2001. The principally non-cash charge consists of $185 million for JCPenney Department Stores and Catalog and $90 million for Eckerd drugstores.

The retailer’s chain of 1,100 J.C. Penney department stores, located mostly in the U.S., has suffered as a result of the company’s difficulty competing with upscale competitors and major discounters, such as Target and Wal-Mart.

J.C. Penney reported a net loss of $409 million for the year ended in January 2000, compared with net income of $336 million in 1999.

Earlier on Thursday, the company said it may beat first-quarter earnings estimates after reporting that March same-store sales climbed 2.7 percent, the largest gain the retailer has reported since April 2000, when same-store sales were up 3.4 percent. However, last year’s increase was in large part due to easy comparisons against a month in which sales had declined by 9.5 percent.

  • A Good Recruit:’s CFO Lowell W. Robinson earned $153,846 in salary and $125,000 in bonus during his first year at the New York City- based online recruiting company. Total Compensation: $278,846.

Robinson began his career at Hotjobs in May 2000. From 1997 until 1999, he served as EVP of global business and CFO of PRT Group Inc. From 1994 until 1997, he was EVP and CFO at Advo, Inc., a Windsor, Conn.-based direct mail company. Robinson holds an MBA from the Harvard Graduate School of Business.

In 2000, revenue was approximately $96.5 million, an approximate 367 percent increase from 1999. Excluding revenues of Resumix, a developer of staffing management software that was acquired in 2000, revenues for 2000 increased approximately 320 percent over revenues in 1999.

However, HotJobs lost 99 cents per share, compared with a 68 cents per share loss in 1999.

In a February press release, Robinson said, “During the quarter, we achieved solid top-line growth and improvements in our operating efficiencies. As a percentage of revenue, gross margin was 78 percent versus 75 percent in third quarter 2000 and total operating expenses (excluding non-cash compensation and goodwill amortization charges) declined to 105 percent in the fourth quarter of 2000, compared to 108 percent in the third quarter of 2000 and 148 percent in the fourth quarter of 1999. Equally important, we ended the quarter with approximately $99 million in cash, cash equivalents, and marketable securities, which will fund our business plans and enable us to pursue high-margin, high-growth new initiatives as opportunities arise for at least the next 12 months. By executing our strategies of focusing on high return areas, tightening business processes, and realizing more effective investment spending, we believe we are on target for HotJobs to achieve profitability no later than the fourth quarter of 2001.”

Meanwhile, On March 26, Hotjobs announced that it cut 15 percent of its staff and is planning to take a one-time restructuring charge of $2.5 million to $3 million in the first quarter to position itself to become profitable no later than the fourth quarter.