Abercrombie & Fitch CEO pay falls 38 percent

AP News
Posted: Apr 25, 2011 12:04 PM
Abercrombie & Fitch CEO pay falls 38 percent

The chairman and CEO of teen clothing retailer Abercrombie & Fitch Co. received a pay package worth $22.5 million, a 38 percent drop from a year earlier, mostly because of a reduction in option awards, according to an analysis by The Associated Press.

Jeffries, 66, received a base salary of $1.5 million and a performance-based bonus of $2.3 million, according to a filing with the Securities and Exchange Commission.

He received option awards worth $14.1 million on the date they were granted, a 58 percent decline from the prior year.

He also received other compensation worth $4.6 million, including a previously disclosed $4 million payment for eliminating unlimited personal use of the company aircraft. If Jeffries terminates his contract without good reason, he'll have to repay part of the $4 million.

Jeffries, who has led the company for 19 years and signed a five-year contract in 2008, "functions as the brand visionary and chief creative talent for the company," according to the filing. "The company's compensation arrangement with the CEO reflects his unique 'founder' status and the extraordinary contributions he continues to deliver."

The retailer, based in New Albany, Ohio, faced falling sales during the recession as customers traded down from its relatively high-priced offerings. Abercrombie cut its prices and revamped its clothing offerings and results improved in 2010.

The company's full-year earnings surged to $150.3 million, or $1.67 per share, from $254,000, or break-even per share, the year before. Annual revenue increased 18 percent to $3.47 billion. Its stock price jumped 65 percent during the year.

The Associated Press formula calculates an executive's total compensation during the last fiscal year by adding salary, bonuses, perks, above-market interest the company pays on deferred compensation and the estimated value of stock and stock options awarded during the year. The AP formula does not count changes in the present value of pension benefits. That makes the AP total slightly different in most cases from the total reported by companies to the Securities and Exchange Commission.

The value that a company assigned to an executive's stock and option awards for 2010 was the present value of what the company expected the awards to be worth to the executive over time. Companies use one of several formulas to calculate that value. However, the number is just an estimate, and what an executive ultimately receives will depend on the performance of the company's stock in the years after the awards are granted. Most stock compensation programs require an executive to wait a specified amount of time to receive shares or exercise options.