Quiksilver’s Solid Gains Not Reflected in Chairman’s Pay

When was the last time you saw a company’s annual profits rise, its stock price soar and the boss get a 43% cut in take-home pay?

That’s the case at Quiksilver Inc., the Costa Mesa surf wear designer and snowboard maker, where co-founder Bob McKnight, the chairman and chief executive, saw his pay for fiscal 1997 fall to $532,000 from $936,000 a year earlier.

The sharp decrease in McKnight’s pay is tied to changes in the way the company compensates its executives, according to the company’s annual proxy statement filed with the Securities and Exchange Commission.

In fiscal 1996, McKnight got a $589,000 bonus on top of his $347,000 salary under a system that was linked to the performance of Quiksilver’s stock price.

In fiscal 1997, the bonus--then tied to growth in pretax profits--fell to $168,000. McKnight’s base salary actually rose 4.9%, to $364,000. He holds unexercised stock options worth about $1.5 million.

The change was prompted by the board’s desire to reward executives for things they can control, such as the growth in profits, rather than for things they can’t control, such as the stock market, said company spokesman Jim White.

Harry Hodge, head of the company’s burgeoning European division, saw his pay sliced, but only by 6% to $632,000.

By comparison, Quiksilver had a great 1997 as annual profits rose for the fifth consecutive time, by 8.5%, and its stock soared 44%.

Russ Stanton covers retail businesses and restaurants for The Times. He can be reached at (714) 966-5609 and at russ.stanton@latimes.com