December 9, 2013
Abercrombie & Fitch intends to keep its CEO, but is changing the terms of his next contract, adding performance clauses. The company also today announced a new plan of succession.
The move comes days after an investment firm sent a letter to Abercrombie’s board urging it to replace Michael Jeffries “and reverse the years of disappointment to which (Abercrombie) shareholders have grown accustomed.”
The new, restructured employment agreement with Jeffries will take effect upon the expiration of his current contract on Feb. 1.
Under the new contract, Jeffries’ base salary will be $1.5 million a year. Unlike the old contract, signed in 2008, there will be no retention bonus, and the formula for semi-annual equity grants has been eliminated. Instead, the new contract offers performance incentives each year that have a target value of $6 million.
“The new agreement employs a more simplified, performance-based compensation structure that is designed to align incentives closely with the success of the company and the interests of shareholders,” said Craig Stapleton, lead independent director of the board, in a statement.
Jeffries, 69, is “a visionary in this industry,” Stapleton said, “and has been responsible for reinventing, creating and evolving today's Abercrombie & Fitch and Hollister brands.”
The announcement includes details of a succession plan that includes creating new executive positions for Abercrombie’s major brands. The company intends to recruit brand presidents from outside the company to oversee the Abercrombie & Fitch, abercrombie kids and Hollister brands.
As part of the executive moves, one of Abercrombie’s current top managers, Leslee Herro, will retire in the spring as executive vice president of merchandise planning, inventory management and brand senses. Herro, 53, will remain with the company for an unspecified period to provide advice and complete special projects, the company said.
“Leslee has been an incredible partner to me for the past 22 years,” Jeffries said in a statement. “Her deep insights in to the business, strong sense of culture, and constant good humor will be sorely missed by me and everyone else with whom she has worked. Abercrombie & Fitch will never be quite the same without Leslee, and she will always be part of the Abercrombie & Fitch family. We wish her all the best as she chooses to focus on her own family.”