November 1, 2010, 12:00 AM

Banking on the web

Top e-retail execs took compensation hits during the recession, but many are still million-dollar babies.

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Mindy Grossman, CEO of TV and web retailer HSN Inc., raked in the highest compensation last year among executives of 27 publicly traded online retailers, nearly $4.1 million.

But that's barely half of the more than $8 million she earned in 2008 in salary, stock compensation and other pay, according to the retailer's most recent proxy statement. The big difference? The value of stock awards, stock appreciation rights and stock options, which declined to $1.05 million in 2009 from $6.43 million in 2008.

She wasn't alone. Total compensation dropped 17.8% for CEOs of publicly traded online retailers in the most recent fiscal year, according to the proxy statements those companies filed this year with the U.S. Securities and Exchange Commission. For all 110 of the executives included in Internet Retailer's review of pay packages, average compensation in the last fiscal year stood at $1.04 million, down 21.2% from $1.32 million in the prior year.

Stock-based compensation in 2009 represented 42% of executive pay packages, down from 47% the previous year but still higher than the 39% for 2007. Publicly traded e-retailing companies continue to link pay with stock market performance—and few companies' shares fared well in the wake of the late 2008 collapse on Wall Street.

Generally, the pay trends for e-commerce executives, notably the topmost ones, match trends in the wider retail world, says Aaron Boyd, head of research for Equilar, a company that tracks executive compensation.

"What we are seeing in general for CEOs across all industries is decline in pay last year, mostly driven by lack of bonus or lower bonuses," he says. He adds that company leaders tended to receive stock awards at the beginning of 2009, a low point for the stock market, and that the depressed value of those stocks could turn into hidden value for executives as share prices rise in an improving economy.

Top earners

Still, e-commerce jobs often pay more than those in other areas of retailing, says Wendy Weber, president of executive recruitment firm Crandall Associates Inc. Based on her salary surveys this year, a vice president of marketing in e-commerce can expect to earn $155,700, versus $145,100 for offline posts. Additionally, an e-commerce marketing director can expect pay of $125,900, higher than the $104,300 for other retail marketing chiefs.

Base pay for the 110 executives included in e-retailers' proxy statements—the positions range from CEO to marketing vice presidents—averaged $371,661 in 2009 or the most recent fiscal year for retailers whose fiscal year is not the calendar year, up 6.6% from the previous year. Base pay accounted for about 35% of total compensation in 2009, up from 32% for 2008.

Joining Grossman near the top is Joseph M. Redling, CEO, president and chairman of Nutrisystem, and Robert Keane, CEO, president and chairman of VistaPrint. Redling had total compensation of $3.5 million in 2009, down from $7.2 million in 2008. Keane earned $3.1 million in 2009, up from $2.3 million in 2008.

Another big winner was Gilbert Fiorentino, CEO of Systemax Technology Group, which owns consumer electronics retailer CompUSA. His total compensation reached nearly $3.1 million last year, up from $2.5 million for 2008. Also at Systemax, Lawrence Reinhold, vice president and chief financial officer, saw his compensation increase in 2009 to $2.2 million from $1.2 million in 2008.

At the world's largest online retailer by revenue, Inc., CEO Jeffrey Bezos earned almost $1.8 million in 2009, of which only $82,000 was base salary. His compensation was $1.3 million in 2008. Thomas Szkutak, the company's chief financial officer, earned $163,000 in 2009 compensation, a far cry from $7.7 million in 2008.

For the top titles included in the review—CEO, president, chairman and vice chairman—total compensation averaged $1,405,517, down 16.8% from $1,690,050 in 2008.

For chief operating officers, the average total compensation package decreased to $708,239 in 2009, down from $1,205,517 the previous year. Other C-level executives—such as chief technology officer and chief marketing officer—earned an average of $753,425, down from $1,011,956.

David Zinberg, CEO and chairman of online jewelry retailer and auctioneer, had the largest compensation gain in 2009. With a base salary of $447,503 and stock compensation of $800,000, his 2009 compensation package was $823,329 larger than his 2008 package. Another executive, Leon Kuperman, president and chief technical officer, received $513,092 more in compensation in 2009 than in the previous year.

Besides HSN's Grossman, the biggest compensation losers included Joseph J. Lombardi, chief financial offer with, whose total compensation declined by $2,452,109; and Kevin McGrath, CEO of, who took a hit of $1,732,652.

Looking ahead

Despite the apparent easing of the recession and the steady growth for online retailing—including predicted sales gains of up to 15% for the upcoming holiday season—e-commerce executives shouldn't expect big bumps in compensation over the next few years, says Gene Manheim, managing director for executive recruiter Herbert Mines Associates, where he leads the e-commerce practice. One reason is that e-commerce has become more mainstream, he says.

"I don't think there is going to be this significant, unprecedented uptick in what e-commerce companies are going to be paying senior-level people," he says. "Companies are just going to be tracking the packages that are paid in other similar businesses. E-commerce is an established industry now."

That's not to say some e-commerce professionals won't enjoy bigger salaries. Harry Joiner, an e-commerce recruiter who focuses on mid- and senior-level executives, is on track to handle nearly 130 executive searches this year, up from about 70 in 2009. He says annual compensation for an experienced e-mail marketing manager has increased this year to $100,000, up about 15%. Compensation for search marketing managers also is up about 15%, to $150,000. But the typical salary of an experienced e-commerce director has held steady at about $150,000, he says.

Weber, of Crandall Associates, says e-commerce professionals with experience in search engine optimization and social media generally can expect more salary growth than others. And mobile commerce could prove a lucrative opportunity, she says, even if the evidence so far is thin. "Mobile commerce is the next growth channel," she says. "We have anecdotal evidence that those with mobile marketing experience are highly compensated."

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