Fireman, Paul

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Fireman, Paul

(1944-)
Reebok International

Overview

Paul Barry Fireman accomplished what others considered impossible. He transformed his family's wholesale sporting goods business into Reebok International, one of the world's chief contenders in the athletic shoe market. Fireman attended a trade fair in Chicago in 1979 and was impressed by a display of hand-sewn leather sneakers called "Reeboks," which were made by the world's oldest athletic shoe company, J.W. Foster & Sons. Six months later, he had convinced the British company to let him distribute the shoes in the United States. Within five years, Fireman's company, Reebok, U.S.A., bought out all rights to the shoe, and Reebok International was born. Fireman worked to create a market for designer sneakers. By 1987, his company became the leading manufacturer of athletic footwear in the United States, and was second only in the world to Adidas.

Personal Life

Paul Fireman was born on February 14, 1944, in Cambridge, Massachusetts. He attended Tabor Academy, a private secondary school in Marion, Massachusetts. He enrolled in Boston University but did not stay to obtain his degree. Instead, he went to work for his family's company, BC Recreational, selling outdoor recreational equipment. He eventually became vice-president, then treasurer of the company. Fireman and his wife, Phyllis, have three children. They live in Newton, Massachusetts, an affluent suburb of Boston. Nearby is the town of Stoughton, where Reebok, International is headquartered.

Fireman relaxes by playing golf. He is not considered to be athletic, despite his company's spotlight in the athletic arena. When he was denied membership in the exclusive Oyster Bay, New York Country Club, he went out and bought his own club. He is described as a person who speaks directly and decisively. Commenting about himself, Fireman once said, "I tend to get right to the point."

Fortune magazine's list of the 400 richest people in America estimated Fireman's wealth at $535 million. Fireman said in 1987, after he changed from his usual casual attire of jeans to suits and wing-tip shoes, that he refused to let financial success fail to remind him of who he has always been. In March of 1987, USA Today reported that Fireman claimed, "We moved to a ritzier neighborhood. But I will still go out for the same beer and pizza."

Career Details

Fireman was working in his family business for over 15 years by the time he discovered Reebok shoes. Whatever he did or learned before that moment was all a prelude. His career at the top of the business world began with a trip to a Chicago trade fair.

J.W. Foster & Sons, which was founded in Britain in 1895, was the fair participant that caught Fireman's attention. In the 1950s J.W. Foster & Sons started making special, hand-sewn shoes for the world's best runners. Their shoe was named after a species of African antelope that was well known for its speed.

Fireman quickly saw the potential these shoes had in the American marketplace. People were beginning to be conscious of fitness and joggers had become increasingly visible on America's pavement by the end of the 1970s. He persuaded the shoe manufacturers, already known as Reebok International, to let him distribute their product in the United States.

Although sales of Reeboks were initially slow, Fireman demonstrated a solid understanding of market-driven trends. The shoes were initially available at $60 a pair. They were amongst the most expensive athletic shoes on the market during the late-1970s. By 1981, Fireman had run out of money. In a bold move, he raised cash by selling about 60 percent of his new company to Pentland Industries, a London-based industrial holding company, for $75,000. Fireman agreed to a $65,000 annual salary from Pentland and an incentive bonus of 10 percent of pre-tax earnings more than $100,000. Fireman would also run the new company.

Fireman's first major success was his anticipation of the aerobics craze that went along with women's increased interest in fitness and sports. These consumers had not yet been courted in the way that Fireman began to court them. Fireman used research as the necessary tool to serve the customer that nobody had yet served. In the August 3, 1986 issue of the Los Angeles Times, Fireman said, "All marketing, design, and production are directed toward answering the requests, needs, and fantasies (of customers) versus us trying to tell the consumers what they want." Fireman took the lead in doing what others would do after him. He went to fitness leaders for advice. This strategy began to make a difference in how America shopped for shoes. Fireman's "Freestyle" shoe was the first athletic shoe designed specifically for women. Reebok made them soft, lined them with terrycloth, and added delicate colors. Most of all, they made a sturdy shoe that survived the new fitness consciousness that was sweeping through America.

Fireman decided to diversify Reebok in the mid 1980s. His goal was to turn the company into a multinational corporation worth $2 billion. The process involved the three steps of acquisitions, internal development, and international expansion. Between 1986 and 1987, Reebok acquired several companies, including Avia, a rival athletic shoemaker; John A. Frye, the prestigious and stylish boot maker; Rockport, a company known for its sporting and casual shoes; and Ellesse, an Italian company known for making expensive athletic shoes and clothing.

In 1986, Fireman's Reebok entered the sportswear market. Due to problematic shipments and inferior import quality, Reebok missed the spring season altogether that year. Sales registered a mere $39 million, not enough to make much of a statement or realize the profits for which the company had hoped. Again, however, Fireman did not give up. He sought out Douglas Arbetman, formerly a divisional president with Calvin Klein, to head the apparel unit that September. Most of the design and sales staff were replaced.

These problems and adjustments in the sportswear division were followed by management restructuring throughout the whole company. At the end of March 1987, Fireman named Joseph LaBonte, formerly president of Twentieth Century Fox studios, as Reebok's new president and chief operating officer. Fireman also hired Mark Goldston, a former president of Faberge, and Frank O'Connell, former chief of operations for HBO Video.

Fireman's salary kept pace with soaring company profits throughout the 1980s. From 1984 to 1985, his salary jumped from $1.2 million to $5.5 million. Pentland, Reebok's holding company, cut a new deal with Fireman when his original contract expired in 1986. Fireman would be paid a base salary of $350,000 plus five percent of pretax profits over $20 million. By 1990, this deal brought him, with stock options, an annual salary of $33.3 million. That same year, Pentland decided to sell 30 percent of its Reebok holdings. They followed in April 1991 with the sale of another 19 percent. Pentland announced in November 1991 that they planned to sell all of their remaining Reebok stock.

Fireman decided to take a pay cut in 1990 as well. The size of the cut was unprecedented in American corporate history. Effective January 1991, Fireman took a base pay of $1 million, with bonuses totaling no more than $1 million. Fireman agreed to take this cut after he was attacked as the chief executive who had delivered the worst shareholder performance in relation to his own pay.

Fireman proved invincible in the face of increasing criticism throughout the 1990s. He continued to invent new products and new advertising campaigns. His best success turned out to be with the teen and preteen age groups, even though he targeted the more desirable 18 to 35 year olds. In 1990, Reebok turned over its advertising to Hill, Holliday, Connors & Cosmopulos, Inc., a Boston-based agency. They hired the famous pop singer and personality Madonna to introduce two new shoes in a series of back-to-school ads. The two shoes introduced were the Double Pump, featuring two air bladders, and the Blacktop, a basketball shoe. With Fireman's approval, the new advertising campaign adopted a new slogan: "Life is short. Play hard."

In 1996, Fireman opened his Reebok Sports Club/NY, in New York City, in a further attempt to gain an older clientele and expand his reach in the marketplace. Reebok was also an official licensee for the 1996 Summer Olympics.

Throughout the-late 1990s, Fireman struggled to hold on to a sizeable share of the market. Reebok's rival, Nike, suffered great losses through the negative publicity of its underpaid, underage Asian workers. Many colleges boycotted Nike and its products. Despite these setbacks for its number one competitor, Reebok continued to struggle. In an August 18, 1997 article in Fortune magazine, Fireman commented about his company's change of direction: "We kind of forgot one of the key ingredients of our success-that the product is more important than the celebrity athlete." Fireman also tried to turn things around by trimming costs, selling off Avia shoes and other company interests. Reebok's new DMX 2000 series shoes, using DMX and 3D Ultralite technologies, were also expected to capture more consumer profits.

Chronology: Paul Fireman

1944: Born.

1979: Obtained rights to sell Reebok shoes in the United States.

1981: Sold 60 percent of company to Pentland Industries, London to raise money.

1982: Introduced Reebok Freestyle shoe, the first aerobic shoe marketed.

1984: Fireman and Pentland Industries bought out Reebok from Foster & Sons.

1986: Entered sportswear apparel industry with Reebok line.

1986: Reebok surpassed Nike as top-selling manufacturer of athletic shoes in the United States, second only in the world to Adidas.

1987: Engineered major management restructuring of Reebok.

1988: Launched controversial $35 million "Reeboks lets U.B.U." advertising campaign.

1988: Initiated Reebok Awards for Human Rights.

1990: Took a pay cut considered the largest in U.S. corporate history.

1996: Named to Footwear News Hall of Fame.

1998: Criticized by Reebok shareholders as company profits lag.

In March 1998, the Wall Street Journal reported that Fireman would receive only 56 percent of his annual bonus in 1998 due to his failure to meet performance goals. This meant he received only $562,000 out of a possible $1 million bonus. As of late May 1998, however, the sports shoe web page FOOTACTION USA reported that Fireman told shareholders that the company has "the best product line in the industry." Fireman also announced that he planned a "Try on the Future" tour and would send out vans to major shopping malls so that customers could try on the company's newest products.

Social and Economic Impact

Fireman took the lead in an emerging multi-billion dollar athletic shoe industry when such a move was a great risk. He also shocked corporate America by taking the advice of fitness experts and consumers. Less than twenty years after he began, Reebok became a $2 billion company. Fireman's refusal to step aside, even in the midst of disappointing shareholder profits, proved his determination and hard work. Fireman created a constant challenge to Reebok and to all industry leaders to keep changing to increase consumer satisfaction and profits.

Frieman's greatest contribution to corporate America is his diligent effort in the area of human rights. Amnesty International honored Fireman for his work in this area. Along with Amnesty International, Fireman established the annual Reebok Human Rights Awards for activists under the age of 30 who have made significant achievement for human rights causes. In running his own company, Fireman said, "I didn't want this to look like, taste like, or smell like an American corporation of the '50s, '60s, or '70s. I thought Reebok should be operated differently." Fireman is outspoken beyond his own responsibilities to lessen human suffering for workers around the world. He also took all of corporate America to task when he called on corporations to take social responsibility more seriously. When he discovered manufacturer abuse of workers in various Asian countries, he did not hesitate to discontinue business with them. Under Fireman's direction, Reebok implemented worker standards, known as the Reebok Human Rights Protection Standards. These standards are enforced through a system of education, training, and factory audits.

Fireman has honored his customers by doing careful research to understand their needs. He has also worked repeatedly to ensure that the world is a better place. He proved that American capital ventures can survive financially and still serve the public welfare.