Abercrombie CEO Benefits Settlement OKd

From Bloomberg News

A judge Tuesday approved a lawsuit settlement in which Michael S. Jeffries, Abercrombie & Fitch Co.'s chairman and chief executive, agreed to cut in half a $12-million bonus and forgo new stock options for two years.

Shareholders of the casual-clothing retailer sued in February in Delaware Chancery Court, saying directors wasted corporate assets by giving Jeffries as much as $22.9 million in annual benefits

“It is a reasonable settlement,” Judge William B. Chandler III said in Georgetown, Del. “The litigation aspect would have been a tough climb.”

The company will review corporate governance practices and provide more public information about executive compensation. In papers filed with the court in April, lawyers for Jeffries and directors denied wrongdoing and said they settled the suit only to avoid the uncertainty, harm and expense of litigation.

“Jeffries’ compensation was well beyond market levels,” Eric L. Zagar, an attorney for the shareholders, said at Tuesday’s hearing.


“The result fairly evaluates the risks on both sides and the right thing to do for this company.”

The $12-million “stay bonus” originally was to be paid if Jeffries remained in his job through 2008. Under the agreement it is now also tied to growth in the company’s earnings per share from Feb. 1, 2005, through Jan. 31, 2009, with a 13.5% increase required to earn the maximum of $6 million.

Abercrombie & Fitch agreed to take several steps to add independent members to its board and compensation committee.

The garment company, which caters to teenagers, said in April that sales at stores open at least a year had risen for seven straight quarters. It plans to expand in Europe next year.

New Albany, Ohio-based Abercrombie & Fitch’s shares rose $1.98 to $68.53.