Abercrombie Shareholders Say Executives Are Overpaid

Shareholders expressed their disapproval with the pay packages of Abercrombie & Fitch executives including CEO Mike Jeffries at the company's recent annual meeting.

Abercrombie & Fitch executives received little support from investors for their compensation packages at the company's annual shareholder meeting last week.

An overwhelming majority of shareholders voted against Abercrombie's compensation program for executives, including CEO Mike Jeffries, according to a June 21 regulatory filing. More than 75% of the shares voted were against the company's executive pay packages, while just 19% were in support of them, the filing shows. The votes cast in favor of the pay plan were down from last year, when 23.7% of shares were voted in support of the program.

The low approval numbers in the last two years underscore the erosion of support for rich compensation of Abercrombie executives among investors — in 2011, about 56% of shares vote at the company's annual meeting supported the company's executive pay plans, according to a report by proxy advisory service Glass Lewis.

Typically, more than 90% of voting shareholders back such resolutions at S&P 500 companies. But despite the movement toward investors having a "say on pay," the disapproval vote is nonbinding, meaning Abercrombie is under no obligation to change its compensation plans even in the face of intense pressure from shareholders.

CEO Mike Jeffries' salary was $8.16 million for fiscal 2012, exclusive of equity awards, filings show.

Abercrombie "has been deficient in aligning pay with performance," Glass Lewis analysts said in the report ahead of last week's meeting, noting that certain equity awards are linked to short-term performance. "A properly structured pay program should motivate executives to drive corporate performance, thus aligning executive and long-term shareholder interests. In this case, the company has not implemented such a program."

Glass Lewis has included Jeffries, 68, on a list of the 25 most overpaid S&P 500 executives for the past three years. His current employment contract expires on Feb. 1, 2014.

Abercrombie's stock has fallen 9.1% this year to about $43.65 a share.

The company has faced heightened scrutiny over the last 12 months for dubious corporate governance practices and for supposedly being out of touch with today's American teens.

Still, Jeffries "is effectively the 'founder' of the modern day Abercrombie & Fitch due to his unique role and contributions during his more than 20-year tenure," Abercrombie said in its most recent proxy filing. "In addition to his role as Chairman and CEO, he also functions as the brand visionary and chief creative talent for the company. Under his leadership, the company reinvented the Abercrombie & Fitch brand, created the Hollister, abercrombie and Gilly Hicks brands and launched a long-term international expansion plan."

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