Abercrombie & Fitch CEO contract restructured

Abercrombie & Fitch in new, restructured agreement with CEO Jeffries

Associated Press

Abercrombie & Fitch is reworking its contract with Chairman and CEO Michael Jeffries, tying his compensation more closely with company performance.

Jeffries helped establish the company's reputation after arriving in the 1980s, but Abercrombie has struggled recently and Jeffries came under withering fire for comments relating to the type of customer he wants in his store and the fact that the store does not offer plus sizes.

Shares are down 30 percent this year, but almost all teen retailers are under pressure.

Just last week, Engaged Capital, which owns 400,000 shares, sent a letter to the company demanding that Jeffries be replaced. Engaged said Monday that it believes the company's "perennial underperformance is a result of a failure of leadership" and urged the board to put new leadership in place.

In a regulatory filing, Abercrombie & Fitch said that Jeffries will still have an annual base salary of $1.5 million, which will be reviewed every year. The new agreement has no retention or sign-on grant, and the formula for semi-annual equity grants contained in the 2008 agreement was eliminated.

Jeffries is eligible for long-term incentive awards each year with a target value of $6 million. The target value will be reviewed annually and may be increased at the sole discretion of the compensation committee if company performance warrants such an adjustment. The vesting of at least 60 percent of each annual long-term incentive award (based on the target value of the total award) will be subject to performance criteria as determined by the compensation committee.

Similar to the 2008 contract, Jeffries can use the company aircraft for up to $200,000 of personal travel. Abercrombie & Fitch said that this is for security purposes.

Also on Monday, the company said that it plans to hire brand presidents for abercrombie kids, Hollister and its namesake brand.

Shares of Abercrombie & Fitch Co. fell 86 cents, or 2.5 percent, to $34.01 in afternoon trading.

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