Abercrombie & Fitch Co. chief executive officer Mike Jeffries is going to be dealing with a boardroom full of new faces — and one contemplating how the company will ultimately transition to a new leader.
The retailer said Wednesday that it would nominate four new independent directors at its annual meeting as part of a settlement agreement with activist investor Engaged Capital, which has been pushing the company for change.
The directors include Hudson’s Bay Co. vice chair Bonnie Brooks, Gap and Ralph Lauren veteran Sarah Gallagher, former Bath & Body Works ceo Diane Neal and former Ernst & Young retail leader Stephanie Shern.
Once these changes are made, Abercrombie’s board will be made up of 12 directors — 11 of them independent and seven of whom will have been added this year.
Non-executive chairman Arthur Martinez said, “These actions will further enhance the board and management team’s focus, including strengthening the business, executing on the company’s strategic plans and succession planning, as Abercrombie & Fitch moves into the next phase of its growth.”
This ratchets up the pressure on Jeffries, who is considered founder of the modern-day Abercrombie and is on the board, but has seen the company’s fortunes wane as of late. In January, he gave up the title of chairman after 18 years, with Martinez taking that role.
Jeffries still has plenty of skin in the game. Even after selling 50,000 shares of Abercrombie stock for $1.8 million Monday, the ceo continues to hold 857,856 shares of the firm, according to a regulatory filing.
Glenn Welling, founder and chief investment officer of Engaged Capital, which holds 0.6 percent of Abercrombie’s stock, said his company worked “constructively” with Abercrombie and withdrew its effort to nominate new directors to the board.
“Since January, the company has added seven new directors, appointed a new chairman of the board and terminated its shareholder rights plan,” Welling said. “These changes position the reconstituted board to set a new direction for the company and execute upon an agenda focused on shareholder value creation.”
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