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Urban Outfitters gives big rewards

Urban Outfitters Inc., the Philadelphia retailer whose sales skyrocketed from $349 million to more than $1 billion in five years, rewarded its board of directors in fiscal year 2007 with $287,424 in compensation, according to the company's proxy statement filed with the Securities and Exchange Commission.

Urban Outfitters Inc., the Philadelphia retailer whose sales skyrocketed from $349 million to more than $1 billion in five years, rewarded its board of directors in fiscal year 2007 with $287,424 in compensation, according to the company's proxy statement filed with the Securities and Exchange Commission.

Nonexecutive directors Scott A. Belair, Harry S. Cherken Jr., Joel S. Lawson III and Robert H. Strouse each received $125,000 in cash and options awards valued at $162,424, compensation greater than board members of larger, more complicated businesses receive. It is also 79 percent higher than the average director's pay of $160,493 found in a survey by the proxy adviser Institutional Shareholder Services.

Members of Procter & Gamble Co.'s board received cash retainers of $75,000 and restricted stock units valued at $125,000 last year, according to its proxy. Their total pay, which includes fees for attending meetings and chairing committees, ranged from $202,000 to $243,000. General Electric Co. paid its nonmanagement directors $250,000 in 2006. Microsoft Corp.'s board members received $200,000.

Urban Outfitters, which operates stores under its own name, Anthropologie and Free People, said its board members were paid appropriately.

"We believe that having directors who are personally aligned with the well-being and ongoing success of the company is positive and serves our customers, employees and shareholders well," founder and chairman Richard Hayne said in a statement released by the company.

Investors have had little to complain about from Urban Outfitters. Its shares have risen more than 500 percent since 2002, outperforming rival specialty retailers such as Abercrombie & Fitch Co. and big-box operations including Wal-Mart Stores Inc. and Target Corp.

Growth has begun to slow from its torrid pace. Revenue in the last fiscal year rose 12 percent, down from 52 percent the year before. Although the stock is still up 11 percent this year, its performance has lagged those of some peers, including Abercrombie and Guess Inc.

"If they are getting sizable salaries, they should be delivering to shareholders sizeable returns," said Holly Guthrie, an analyst with Janney Montgomery Scott who rates the shares as a neutral and does not own them. "They have been thought of as having some of the best management in the business. They do what they need to do to retain their employees and their board."

The company's corporate-governance practices have been criticized by Institutional Shareholder Services, which has questioned how independent the board is from the company management. Hayne argues that his company's board members meet the standards of independence set by the Nasdaq, where the company's shares trade.