Bluefly CEO awarded $6.1 million in 2006 compensation

Online fashion retailer Bluefly Inc. gave its top managers a significant pay raise in 2006 after the group completed a $50 million equity financing deal that eliminated a large majority of outstanding preferred stock.

In November, Bluefly, No. 129 in the Internet Retailer Top 500 Guide, awarded president and CEO Melissa Payner with a package that paid her a combined $6.16 million in 2006. The package included an annual base pay of $500,000, a performance bonus of $944,686, stock awards worth $4.67 million and other compensation of $48,655, according to the company’s recently issued proxy statement.

Bluefly also gave CFO and COO Patrick Barry a total 2006 compensation package valued at $4.9 million. Barry’s package included an annual base of $325,000, a performance bonus of $395,204 and stock awards worth $4.15 million.

“The consummation of a financing of this type had been a significant corporate goal and had required Payner and Barry to expend a significant amount of time and attention while continuing to handle their respective responsibilities for the day-to-day operations of the company,” says the Bluefly proxy. “In order to reward them for achieving this goal, the compensation committee awarded additional discretionary cash bonuses to each of them upon completion of the transaction based on the individual efforts of each in consummating this financing.”

Bluefly issued Payner and Barry significant restricted stock awards in exchange for forfeiture of their rights to certain fully vested stock options, according to the proxy statement.

The proxy statement also notes that chief marketing officer Bradford Matson earned a package worth $740,000 in 2006, including base pay of $350,000, a bonus of $60,000 and a $330,000 stock award. Senior vice president of e-commerce Martin Keane had total compensation of $529,000. His package included an annual base salary of $196,923, a performance bonus of $45,000 and a stock award of $264,000.

2006 revenue for Bluefly Inc. grew 31% over 2005 revenue to $77.1 million from $58.8 million, the company reports. Net loss increased to $12.2 million from $3.8 million. Average order size increased 17% to $257.64 from $220.17 in the fourth quarter of 2005.

The company also reported that its operating loss increased to $12.1 million from $3.1 million for 2005. The growth was primarily a result of $4.5 million in stock-based compensation, a year-over-year increase of $6.4 million in marketing and advertising spending, and executive bonuses of $675,000 in connection with the recent financing.