A big sendoff for Abercrombie’s CEO

By now, you’ve undoubtedly heard the news about the sudden retirement yesterday of Mike Jeffries, who had been Chairman and CEO of Abercrombie & Fitch after more than 20 years of running the company. You may have even seen the news that Jeffries would be getting $5.5m in “cash and benefits continuation” according to the 8-K that the company filed late yesterday.

We wanted to take a closer look because Abercrombie and Jeffries has been something of a frequent flyer here at footnoted over the years. Indeed, we counted 37 separate items that we’ve written about Abercrombie over the years, including this pearl from 2010 that had the company paying Jeffries $4m not to use the corporate jet as frequently as he did in 2008.

What we found is that if you read yesterday’s 8-K carefully, you realize that the $5.5m is really just the beginning. The company says that much in the 8-K with the words “in addition” before disclosing the $5.5m. But you have to go back to Jeffries’ employment agreement from last December and the proxy statement to get additional details. We wrote about the amended agreement last December (subscribers only), noting that the new agreement provided $6m in long-term incentives.

But there’s another wrinkle here. The 2013 agreement is valid through Feb. 1, 2015. Since Jeffries stepped down on Dec. 8, 2014 that leaves some questions, as outlined in the 2013 agreement:

The 2013 Agreement provides that if Mr. Jeffries’ employment is terminated following expiration of the term (as a result of delivery of notice to terminate the term by either party as described above), by the Company for Cause, by Mr. Jeffries other than for Good Reason, or due to his Retirement, Mr. Jeffries will only be entitled to: his then current accrued and unpaid base salary through the date of termination, any earned or accrued and unpaid bonus or other incentive compensation for any completed fiscal years preceding the year of termination, any previously deferred compensation, reimbursement of reasonable expenses; and any other benefits and payments to which he is then entitled under the Company’s employee benefit plans (collectively, the “Accrued Compensation”).

Yesterday’s announcement isn’t really clear on whether this provision kicks in. But in  this Bloomberg story on Jeffries’ resignation, his exit package was valued at $27.6 m. Looking closely at the proxy and at yesterday’s 8-K, we think the number is actually $32.7m plus the additional $5.5m promised in yesterday’s filing.

Granted, he did run the company for 20 years and presided over some amazing growth. But as we’ve documented over the years, he’s also been unusually well compensated in many different ways, including the frequent private jet usage.


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