Tommy Hilfiger’s $51M Payday Is Proof of His Negotiating Savvy

Tommy Hilfiger has a knack for coming out on top — and designers looking to cash out on the brands they built should take note.

Hilfiger is not only one of the highest-profile names in fashion, but thanks to some savvy negotiating along the way, he’s also among the highest paid.

Last year the brand’s corporate parent, PVH Corp., logged pre-tax costs of $50.7 million to cover “a portion of future payments to Mr. Hilfiger,” according to a regulatory filing. The company has worked to get ahead of what’s due to the designer before, logging $82.9 million in costs for a similar cash payment in 2017.

That $133.6 million snapshot isn’t executive compensation in the traditional sense. Hilfiger doesn’t get paid a salary or bonus and he doesn’t receive equity awards at PVH, according to a source.

Instead he is paid a portion of sales under a private agreement, the details of which have not been disclosed.

Basing pay on sales is a potentially very good deal — if one can get it.

Hilfiger connected his compensation to the brand’s sales early on. When the brand was its own public company, the designer had a lifetime agreement that paid him the equivalent of 1.5 percent of any sales over $48 million as well as a base salary of $900,000, according to the company’s 1997 annual report.

In 2006, when Apax Partners was in the process of buying the company, Hilfiger signed a new lifetime deal that paid him $14.5 million in cash annually for three years, and a minimum of $14.5 million for the fourth year, according to another regulatory filing. Then he was due to receive “a cash amount based on worldwide sales and licensing revenues of the company and its subsidiaries.”

The percentage was not disclosed, but Apax, which bought the company for $1.6 billion, flipped it to PVH for $3 billion in 2010.

The contract has been amended again under PVH, at least to allow the company to buy out a portion of future payments to Hilfiger.

Whatever the current deal is, the latest payments to Hilfiger prove that it pays out handsomely.