June 13, 2012 (Update) -- Judge Lawrence K. Marks, a New York state judge, dismissed a Florida pension fund's shareholder derivative lawsuit, ruling that the fund had to take its issues up with the retailer's board of directors.
San Diego, Nov. 23, 2011 (Shareholders Foundation) -- An investor in NYSE: RL shares filed a lawsuit in State Court against certain executive officers and directors of Ralph Lauren Corp over alleged breaches of fiduciary duties in connection with alleged unwarranted bonuses and excessive salaries of the CEO and chairman of the company Ralph Lauren and other officers.

According to the complaint the plaintiff alleges that the directors breached their fiduciary duties by agreeing to pay unwarranted bonuses and excessive salaries to the CEO and chairman and other executives of Ralph Lauren Corporation.

Ralph Lauren Corporation has performed well in recent years. Ralph Lauren Corp reported that Revenue rose from $4.97billion for a 53weeks period ending on April 3, 2010 to $5.66billion ending for a 52weeks period ending on April 2, 2011 and its Net Income over the same time frame increased from $479.50million to $567.60million. Additionally, shares of Ralph Lauren Corp (Public, NYSE:RL) rose from as low as $32.54 per share in March ’09 to over $162 in October 2011.

However, the plaintiff alleges that certain executive officers at Ralph Lauren Corp received excessive payments and/or benefits. Indeed, the total compensation of Chairman & CEO Ralph Lauren Corp. rose from $22.03million in 2009 to $29.7million in in 2011, the President and COO’s pay rose from $3.26million in ’09 to $19.52million in 2011, and the Executive Vice President’s total compensation increased from $4.71million in 2009 to $10.13million in 2011.
But according to the complaint the plaintiff alleges that a media report estimated the CEO’s total compensation for 2011 could be valued at approximately $75.2million, a 53% increase over his total compensation for 2010, which has been valued at $49.3million.

Ralph Lauren Corpoartion’s ownership structure consists of two classes of common stock. 90.6% of the Class B shares are owned by Ralph Lauren outright, while 9.4% of the Class B shares are owned by entities controlled by Ralph Lauren’s family. Since the Company’s inception over forty years ago, founder Ralph Lauren has retained tight control over the Company’s operations and management through his roles as CEO, Chairman of the Board, and controlling shareholder of RLC.
However, the plaintiff alleges that Ralph Lauren’s position as controlling shareholder of the Company not only grants him an enormous amount of power in terms of appointing a supermajority of the board of director, but also the power to extend his influence upon Board committees. The plaintiff claims that Ralph Lauren Corporation has long been treated by Ralph Lauren as if it were a private company rather than a publicly-traded corporation. In the last three years, so the lawsuit, Ralph Lauren has received, inter alia, total reimbursement of over $1 million for personal travel, plus supplemental medical expenses(approximately $70,000 in each of 2009 and 2011)) an allowance for an automobile and driver(approximately $60,000 in each of 2009 and 2011), and other benefits, including personal use of Ralph Lauren Corporation’s aircraft, enhanced business travel accident coverage, consulting services and merchandise discount.