Abercrombie & Fitch opts to keep CEO
Abercrombie & Fitch today announced a new contract for controversial CEO Michael Jeffries to extend his existing contract which expires on February 1st, surprising given how many have been vocal about firing him, especially Engaged Capital (owner of 400,000 shares) who urged the board to fire Jeffires or prepare to be sold. The new contract is simplified, and tied directly to the company’s performance.
“Mike and his team have developed a long-term plan that builds upon past successes, while targeting the specific challenges that the company faces today,” said Craig Stapleton, lead independent director of the board. “We believe he is the right person to embark on this plan, which we believe will deliver substantial and sustainable value.”
Investors are not exactly happy
Shares of the retailer dipped 2.5 percent, in recent trade, down 30 percent this year alone. Engaged Capital said they are “disturbed” by the decision to keep Jeffries and asserts they are looking at all available options to ensure the board is “held accountable for its decisions.”
“The decision appears to be made without any substantive discussion with shareholders — a rushed response,” said Glenn Welling, Engaged Capital’s chief investment officer.
Investors care less about the bigoted statements Jeffries refuses to apologize for (although he says he apologizes that his statements have been taken out of context), but care that shares have fallen considerably as have sales.
It remains to be seen what the board and the company will do, but given all of the missteps on Jeffries’ part, and not only a general attitude problem, but driving people away from the brand, making allusions to his dislike of anyone oversized or unattractive wearing their clothing.