At the beginning of 2022, with the disclosure of financial reports of major listed companies, in addition to the performance figures that have attracted much attention, the salary levels of senior executives have also surfaced, triggering heated discussions. When we focus on peop

Introduction: Amid the global wave of salary cuts and layoffs, these beauty elites are still seeing their net worth rise.

Author 〡 Wu Sixin

At the beginning of 2022, with the disclosure of financial reports of major listed companies, in addition to the performance figures that have attracted much attention, the salary levels of executives have also surfaced, triggering heated discussions. Not long ago, Apple Inc. was unanimously opposed by institutional shareholders because of its CEO Cook 's high salary, which became a hot topic in the financial circle.

When we focus on people, new perspectives and new questions arise - why do companies that offer high salaries not necessarily have the highest performance? How does the beauty group pay annual salaries to its executives to positively affect the company's performance? How can we effectively motivate executives to act in the interests of shareholders and the overall company through adjustments in salary levels?

With these questions in mind, "Future Beauty" took a deep dive into the CEO salaries of 11 multinational beauty groups to explore the wealth and freedom of the top "workers" in the industry.

First, let’s take a look at the annual salary levels of CEOs of these 11 multinational beauty companies:

Executive salary table of the world’s 11 largest beauty groups

What secrets do these data reveal about working in the beauty industry? Why do their annual salaries top the list?

Standing at the top of the labor pyramid, Estee Lauder CEO Fabrizio Freda's income is "conferred as a god"

Obviously, Fabrizio Freda, president and CEO of Estee Lauder Group, with an annual salary of US$65.997 million (approximately 410 million yuan), has become an industry He is a well-deserved "employee emperor". During the same period, the group's revenue was US$16.22 billion (approximately RMB 105.336 billion), a year-on-year increase of 13%.

Fabrizio Freda, President and CEO of Estee Lauder Group

In fact, Fabrizio Freda was already at the top of the salary pyramid in the industry as early as a few years ago. The New York Times and the executive compensation data company Equilar released the "Ranking of the Highest Paid CEOs in the United States in 2018", which shows that among 200 CEOs in the top ten industries including technology, real estate, finance, energy and other industries, his salary is about 330 million. With an annual salary of RMB 1,000, he became the only beauty group executive selected into the top ten. Three years later, this number has increased by 24%.

According to public information, Fabrizio Freda joined the Estee Lauder Group as president and COO in 2008. He had previously served as an executive at Procter & Gamble for decades. In 2009, he was appointed CEO of Estee Lauder Group by William Lauder, the third generation successor of the Lauder family. He lived up to expectations and launched a series of strategies to cut costs and expand overseas markets, and led brands such as GLAMGLOW, Becca, and Too Faced. The acquisition brought Estee Lauder, a family-controlled giant, into the world's top beauty company industry. The Lauder family also relies heavily on the CEO. Not only does it pay high salaries, but it also awards stock options many times. In 2018, Estee Lauder China's official public account also issued special news, saying that Fabrizio Freda was selected into the list of the 30 "World's Best CEOs" published by the American financial magazine "Barron's" in 2018, and emphasized that he is the only Japanese CEO on the list. CEO of a cosmetics company.

After the epidemic year, the Estee Lauder Group’s performance figures for fiscal year 2021 prove the strong management ability of this steady CEO. In the fiscal year ending June 30, 2021, the group's net sales were US$16.22 billion (approximately RMB 105.336 billion), a year-on-year increase of 13%. And sales and profitability have significantly exceeded the 2019 fiscal year. Eight brands, including the main brands Estee Lauder, La Mer and Clinique , recorded double-digit growth. Management also expressed confidence in the 2022 fiscal year.

The larger the company, the higher the annual salary, but this is not necessarily the case

Generally speaking, the larger the company, the higher the annual salary of senior executives.

In fiscal year 2021, the ranking of the world's first-tier beauty and daily chemical groups has not changed significantly. The top five are still Procter & Gamble (491.8 billion yuan), Unilever (379.6 billion yuan), L'Oreal (225.1 billion yuan), Estee Lauder (105.4 billion yuan), Shiseido (57 billion yuan).

Correspondingly, in addition to the "working emperor" Fabrizio Freda mentioned above, Procter & Gamble Company President and CEO David S. Taylor also has an annual salary of up to 23.9 million U.S. dollars (approximately 150 million yuan), Unilever CEO Alan Jope's annual salary in 2020 reached 3.447 million euros (approximately 24.17 million yuan), which is definitely a high-paying "platinum collar". In addition, the annual salary of the sixth L'Oreal global CEO Nicolas Hieronimus, who officially took office in May last year, also exceeded 20 million yuan. This shows that being able to afford high salaries is ultimately due to the greatness of entrepreneurs.

David Taylor, President and CEO of Procter & Gamble

"Future Beauty" noted that L'Oréal Group pointed out in the executive compensation performance evaluation standard regulations that if the CEO's performance exceeds the target, the maximum amount of the fixed salary can be 120% %. The latest financial report shows that in the annual performance review led by L'Oreal Group CEO Nicolas Hieronimus, he won 32.28 billion euros (approximately RMB 225.1 billion) in sales for the group (an increase of 16.1% over the previous year) and 6.16 billion in sales. Operating profit in euros (approximately RMB 42.4 billion) increased by 18.3% compared with the previous year.

Therefore, the compliance rate of the variable part of Nicolas Hieronimus’s annual salary was rated at 116.45%, which is already a high level among the beauty groups, which brought him 1.55 million euros (approximately RMB 1,067 Ten thousand yuan) variable salary, plus a fixed salary of 2 million euros (approximately RMB 13.76 million), the total annual salary is as high as 3.55 million euros (approximately RMB 24.43 million).

It is worth mentioning that Nicolas Hieronimus only officially took up his new position on May 1 last year, which means that in fiscal year 2022, there is still room for a large increase in his salary.

Ye Hongmu, CEO of L'Oréal Group

However, there are also some executives whose compensation is not directly linked to the company's performance. This depends on the company's own compensation mechanism. For example, although the aforementioned L'Oréal has long led the beauty industry in overall scale, CEO Nicolas Hieronimus' income is far lower than that of Estee Lauder's Fabrizio Freda, and he is also ranked behind Coty Group CEO Sue Y. Nabi after.

public financial reports show that Coty, where Sue Y. Nabi serves, sold a total of US$4.63 billion (approximately RMB 30 billion) in fiscal year 2021, a year-on-year decrease of 1.9%, but the annual salary offered to Sue Y. Nabi reached 500 million euros (approximately RMB 34.82 million), second only to Estee Lauder Fabrizio Freda and P&G CEO David S. Taylor, whose company has a scale of over RMB 400 billion.

It is worth mentioning that Sue Y. Nabi officially took over in September 2020. At that time, Coty Group had been deep in losses for five years. The board of directors of Coty Group had high hopes for this new CEO who was parachuted in at the critical moment.

Although the loss situation has not been reversed in fiscal year 2021, Sue Y. Nabi has greatly improved the group's financial situation by strengthening high-end brands and divesting Wella's business. In fiscal year 2021, Coty ’s net loss shrank to US$166.3 million (approximately RMB 1.08 billion), a year-on-year narrowing of more than 80%.

Coty Group CEO Sue Y. Nabi

In Coty’s latest half-year financial statement as of December 31, 2021, Sue Y. Nabi lived up to expectations and turned the group’s performance back into the red. During the period, the group’s revenue was 10.039 billion yuan, year-on-year. An increase of 12%, with a net profit of approximately 1.202 billion yuan, which was greatly improved from the previous year’s net loss of 253 million yuan.

In the final quarter of 2021, Cotea Pacific recorded growth driven by a strong performance in the Chinese market and a recovery in travel retail. In addition, the high-end beauty department, which includes brands such as Burberry, Gucci, Marc Jacobs and Chloe, has experienced strong growth, with net income of US$1 billion (approximately RMB 6.4 billion), accounting for 64% of Coty’s sales, an increase of 12% over the previous year. %. As far as cosmetics brands are concerned, the sales of fashionable cosmetics brands such as Gucci and Kylie almost doubled in Q2.

It is difficult to do business due to sluggish performance, and some people get promotions and salary increases

Even if the company's performance declines, the annual salary of senior executives may increase significantly through internal promotion.

For example, L'Occitane Group CEO André J. Hoffman's annual salary increased by 42% year-on-year to 682,000 euros (approximately RMB 47.5 billion) compared with the previous fiscal year.

In terms of group performance alone, L'Occitane 's performance in the past fiscal year was relatively sluggish, with annual sales of 1.538 billion euros (approximately RMB 11.827 billion), a year-on-year decrease of 6.5%. In order to adjust to "stop bleeding" and cope with the offline cooling caused by the epidemic, L'Occitane significantly closed 796 retail outlets, self-operated stores, and travel retail, distribution and franchise points throughout the year. At the same time, R&D spending and employee benefits have also been cut.

In fact, André J. Hoffman’s salary increase is directly related to his promotion last year. On September 16, 2021, he officially succeeded Reinold Geiger as CEO of L'Occitane Group.

André J. Hoffman, CEO of L’Occitane Group

It is understood that André J. Hoffman has been responsible for L’Occitane’s business in the Asia-Pacific region since 1995. By mid-2021, the Chinese market has It has become L'Occitane's largest market in the world, recording sales of RMB 430 million from April 1, 2021 to June 30, 2021, accounting for 16.8% of the group's global market share. Just three months after André J. Hoffman took office, ELEMIS, a British high-end skin care brand owned by L'Occitane, opened its first boutique concept store in the International Financial Center in Shanghai, China.

This also explains his promotion - a promotion and salary increase for the person in charge of the Asia-Pacific region, and introducing more brands into the Chinese market through various online and offline channels. From personnel to strategy, L'Occitane is looking forward to the benefits brought to it by the Chinese market. Come to a new growth driver.

Under the impact of the epidemic, uncertainty about executive compensation is increasing

As the epidemic continues to affect global business, beauty groups have maintained salary reduction plans, and executives have to rely on "improving" performance to maintain their annual salaries.

Public information shows that in order to face the impact of the epidemic, Estee Lauder, Shiseido, Beiersdorf, LVMH and other groups have proposed executive salary reduction plans in 2020 to reduce the fixed salaries of executives. Among them, Shiseido President and CEO Masahiko Uotani’s monthly salary dropped by 30%, Beiersdorf’s executive committee members gave up 20% of their fixed basic salary, and L’Oreal’s Nicolas Hieronimus’ fixed salary was also higher than that of the previous CEO. down 10%.

Shiseido President and CEO Masahiko Uotani

On the one hand, we must combat the adverse effects of the epidemic, and on the other hand, we must not let "salary cuts" dampen the enthusiasm of CEOs. Therefore, while reducing fixed salaries, some groups have also increased variable compensation incentives. Simply put, in an unstable environment, the instability of executive compensation has also increased.

For example, Estee Lauder granted Fabrizio Freda a long-term (non-annual) equity award worth US$40 million (approximately RMB 250 million) in March 2021, but these basic shares will not be awarded until the end of fiscal year 2025. All delivered. Unilever lowered the maximum variable pay for CEO and CFO by 6% in its latest remuneration policy.

END