Victoria's Secret Founder Sees Pay Slashed After Chain Stumbles

(Bloomberg) -- Victoria’s Secret is struggling, and that’s taking a toll on the paycheck of founder Les Wexner.

The 80-year-old billionaire, who still serves as chief executive officer of Victoria’s Secret owner L Brands Inc., saw his 2017 compensation slashed by more than 60 percent from a year earlier to $5.7 million.

The move underscores the deepening woes at Victoria’s Secret, long seen as the premier lingerie chain in the U.S. Sharen Jester Turney, who led brand for a decade, abruptly retired in 2016 and Wexner stepped into the role. He tapped Jan Singer, who previously ran Spanx, later that year.

Along with its leadership turmoil, the chain has been grappling with fundamental shifts in what women want -- namely, less of the padded, push-up bra styles and airbrushed models, and more underwear styled around comfort and athletic endeavors.

The compensation cut came after efforts to position some of L Brands businesses for the future failed to produce expected results, according to a regulatory filing Monday, suggesting the company isn’t confident sales will rebound after a disappointing holiday season. The stock had plunged 30 percent this year through Monday’s close, compared with an almost 18 percent gain in the S&P 500 Retailing Index.

2018 Target

L Brands also reduced Wexner’s target compensation for 2018 by 21 percent by halving his base salary, scaling back his annual bonus and putting more emphasis on long-term awards, according to the filing. 

On a personal level, Wexner can probably afford to absorb the pay cut. He’s the richest man in Ohio, with a net worth of $7.1 billion, according to the Bloomberg Billionaires Index. He founded L Brands in 1963 as the Limited, and built the company into a retail behemoth that spun off names like Abercrombie & Fitch and Express Inc., and made Columbus, Ohio, a hub of shipping and commerce.

As competition increases from American Eagle Inc.’s Aerie to online upstarts like ThirdLove, the once ubiquitous Victoria’s Secret is also suffering from declining store traffic. At the same time, the retailer has been slow to innovate online with targeted promotions and buy-online, pickup-in-store offerings.

Last month, L Brands forecast first-quarter earnings of as much as 20 cents a share, well below the 31-cent average of analysts’ estimates. The retailer sees full-year earnings of $2.95 to $3.25 a share. The midpoint of $3.10 a share also missed projections for $3.14. February wasn’t a strong start, with comparable sales -- a closely watched measure -- rising 3 percent, short of the 3.9 percent average of estimates.

©2018 Bloomberg L.P.