Abercrombie CEO's Ill-Fitting Raise
Abercrombie & Fitch's
Michael S. Jeffries, the chairman and chief executive of the teen-apparel retailer, received total compensation valued at nearly $23.2 million in 2008, more than twice his pay from the prior year, according to an Associated Press analysis of a regulatory filing.
The pay hike reflected a sizable bonus tied to his previous contract as well as stock-appreciation rights related to a new contract, says the AP. Jeffries received a base salary of $1.5 million and a performance-based bonus of $6.5 million that more than tripled the $1.9 million reward he received a year earlier.
Sadly, Abercrombie shareholders did not fare as well as their leader over the same period. The stock sank almost 70% in 2008, starting the year near $80 and finishing around $23, close to where the stock trades today. The company's performance doesn't fit the raise either, with net income dropping by almost half in the fiscal year that ended in January.But don't rush to judgment, says the company in a regulatory filing. There's more to Jeffries than his oversized pay package.
First of all, there's his amazing "vision," which the company says transformed it into "one of the most successful and widely known teen retailers of today." No matter that Abercrombie proved itself blind to reality in March when it posted a 34% drop in same-store sales due to its refusal to slash prices like the rest of the retail world.
Then there is Jeffries' uncanny ability to travel through time like a regular H.G. Wells. Abercrombie claims Jeffries, who joined the company in 1992, plays a role at the company "more akin to founder or lead creative talent than a typical CEO."
Funny, our records show that the company was founded in 1892 by a guy named David Abercrombie. Hence, the name above the door of every store reads "Abercrombie & Fitch," not "Jeffries, Inc."
If the company repeats its dismal performance this year, however, there's only one thing we can say: Watch your back, Fitch.Dumb-o-meter score: 95 -- Like A&F's clothing, Jeffries' salary should shrink to fit.