Abercrombie & Fitch Co.’s chairman and chief executive officer Michael Jeffries’ reported income in 2009 was $36.3 million, 56.6 percent higher than the $23.2 million reported in 2008, but in reality, neither he nor the company he heads had that good of a year.

This story first appeared in the May 12, 2010 issue of WWD. Subscribe Today.

According to the firm’s definitive proxy, filed with the Securities and Exchange Commission this week, 91.6 percent of Jeffries’ compensation was in the form of option awards totaling $33.3 million, “which will only be realizable in future years and upon the satisfaction of certain conditions,” including his uninterrupted employment at A&F. In accordance with the terms of the new employment contract signed by the executive at the end of 2008 — and set to expire at the end of A&F’s 2013 fiscal year — Jeffries received a retention grant of stock appreciation rights covering 4 million shares of common stock, which don’t fully vest until the completion of his contract.

Stripping out noncash items, including the options and adjustments for change in pension value and nonqualified deferred compensation, Jeffries earned $3 million last year, down 69.8 percent from $10 million in 2008. Half of last year’s cash take was in salary — unchanged from 2008 at $1.5 million — and the rest in other compensation. He received no nonequity incentive plan compensation, versus $6.5 million in 2008.

To help make the point that new accounting requirements from the SEC force large amounts of money into an executive’s reported compensation, even though it may involve shares that may never vest, A&F put together a chart showing that, under old SEC guidelines, Jeffries’ reported compensation would have been $10.9 million last year, rather than the $36.4 million reported. In 2008, he made $23.2 million under the “new rules” but $16.2 million under the “old” ones.

Jeffries’ compensation package drew attention this year even before the release of the A&F proxy. Last month, A&F filed papers with the SEC saying the ceo would receive a onetime lump-sum payment of $4 million, and in exchange would limit his personal use of the company aircraft to $200,000 a year or else reimburse his employer for the difference. In fiscal 2008, his aircraft use exceeded $1.1 million. Last year, the figure was $639,439, according to the proxy.

His new contract came just before Jeffries was to begin the most difficult year in his 18 years at the helm of A&F, the firm he is credited with reinventing as a fashion brand. Not only did earnings fall 99.9 percent, to $300,000, on a 15.9 percent sales decrease, to $2.93 billion, and a 23 percent drop in same-store sales, but the New Albany, Ohio-based firm closed its Ruehl division, conceived and championed by Jeffries.

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