Warnaco Executive Accepts Severance Cut

Linda J. Wachner, once among the highest-paid corporate executives, settled her $25.1-million severance claim against Warnaco Group Inc. for less than 2% of the amount, the clothing company said.

The former Warnaco chairman, blamed by some investors for the company’s collapse before she was ousted last November after 14 years at the helm, was paid about $90.1 million in salary, bonuses and stock options from 1998 through 2000. Warnaco lost about $219 million during that period.

Under the settlement, Wachner would get $200,000 in cash plus what amounts to an unsecured $3.5-million IOU that is worth only a fraction of its face value, Warnaco said in its quarterly report to the Securities and Exchange Commission.

The claim is worth about 7.2 cents on the dollar, meaning Wachner would receive about $250,000 when the bankruptcy reorganization is concluded, according to court papers. The accord is subject to approval by a federal bankruptcy judge.