Abercrombie & Fitch Co. chief executive officer Michael Jeffries saw his total reported compensation decline by more than 70 percent last year to $2.2 million as a result of a less generous employment contract and a more demanding retail climate.
Jeffries, who in January relinquished the post of chairman of Abercrombie & Fitch to Arthur Martinez but remained ceo, saw his total reported compensation drop from the 2012 level of $8.2 million. The cash portion was nearly cut in half as his salary remained unchanged at $1.5 million and his only other cash compensation came in the form of just under $700,000 in “other benefits.”
The sum of his stock and option awards remained at zero, as in 2012, and the $1.7 million he collected as a cash bonus last year was reduced to zero.
His new contract eliminated the sign-on and retention provisions of the earlier agreement, scheduled to expire as the new fiscal year began in February. In 2011, Jeffries received option awards with a grant date fair value of $43.2 million and, while these amounts weren’t realized, they boosted his reported pay to $48.1 million.
Details on Jeffries’ pay package were contained in Abercrombie’s definitive proxy, filed Tuesday with the Securities and Exchange Commission. The filing emphasized how his compensation had become more closely tied to the company’s performance. The new pact, which can be terminated by Jeffries or the company with 12 months’ notice after its first anniversary next February, also removed provisions which could have added about $88 million to Jeffries’ severance in the event of a change of control.
The severance arrangement was seen as a major obstacle to a possible sale of the company and among the principal complaints outlined by Glenn Welling, chief investment officer of Engaged Capital, owners of about 0.5 percent of the retailer’s stock, in the closing weeks of 2013.
In addition to the separation of the roles of chairman and ceo, A&F is searching for two individuals to head its two principal business units, A&F and Hollister.
Engaged last month settled its differences with A&F, which as part of the agreement has included four new independent director candidates — Bonnie Brooks, Sarah Gallagher, Diane Neal and Stephanie Shern — among those to stand for election to the board at the company’s annual meeting on June 19.
Last year, A&F’s net income declined 77 percent to $54.6 million, or 69 cents a diluted share, as revenues fell 8.7 percent to $4.12 billion.