Oakley Chairman Declines ’97 Salary Amid Poor Profits

In an unusual move for a corporate executive, Oakley Inc. Chairman and President Jim Jannard decided to forgo any compensation in 1997, a year in which the Foothill Ranch sunglasses supplier saw its profits sag.

Company spokeswoman Renee Law said Jannard decided in mid-1996 to waive all future salary and link his compensation entirely to the company’s returns.

As the major shareholder, “he’s very much focused on the performance of the company and the performance of the stock,” Law said. “That’s where his efforts and drive will be rewarded.”

Jannard is Oakley’s largest stockholder, with 38 million shares, or 53.8% of the total. That stake was worth $461 million as of Monday’s closing price of $12.13 a share, down 38 cents on the New York Stock Exchange.

In addition to not drawing a salary, Jannard also received no stock options last year, according to Oakley’s annual proxy statement filed Monday with the Securities and Exchange Commission. He also does not have a written employment agreement.

Jannard was not entitled to a bonus last year, according to the proxy, because Oakley’s financial performance “was significantly below the target established.”

In 1997, Oakley’s profits fell 57% to $19.6 million, or 28 cents a share, from $45.9 million, or 64 cents a share, a year earlier. Sales fell 11% to $193.9 million from $218.5 million.

The problems were caused by a buildup of inventory at Sunglass Hut International, Oakley’s biggest customer, and an industrywide oversupply of sunglasses.

Oakley began to bounce back in the fourth quarter. And in the first quarter of this year, its profit more than doubled to $1.3 million; sales rose 19% to $41 million as orders from Sunglass Hut rebounded.

In 1996, Jannard received $219,633 in salary but no bonus. He had a very big payday in 1995, when he received $380,697 in salary and a $9.31-million bonus, which included $6 million to reimburse him for corporate taxes he paid in previous years.