(Reuters) — A federal judge on Tuesday recommended approval of a revised settlement of a lawsuit challenging former Abercrombie & Fitch Co Chief Executive Michael Jeffries’ pay, three months after another judge rejected a version that appeared to offer few benefits and release too many potential claims.
U.S. Magistrate Judge Norah McCann King in Columbus, Ohio said the revised terms “confer a substantial benefit” upon the apparel retailer and its shareholders as it better aligns pay with performance, tightens conflict of interest rules, and provides for a new chief ethics officer. No money is changing hands.
On Sept. 26, U.S. District Judge James Graham had rejected the original accord, saying it “broadly released shareholders’ claims” while offering little benefit to the company.
But King said the revised settlement released only derivative claims, brought on Abercrombie’s behalf against officers and directors, and not direct claims that shareholders can bring.
She recommended that the plaintiffs’ lawyers, including the firm Bernstein Litowitz Berger & Grossmann, be awarded $1.66 million for legal fees and expenses, below the maximum $2.78 million that was sought. That firm was not immediately available to comment.
The settlement resolves claims that Abercrombie should not have awarded Jeffries more than $140 million since 2007 and let him rack up “massive” travel expenses, even as sales declined and the New Albany, Ohio-based company’s stock lagged its peers.
Abercrombie was once a dominant force in the teen apparel sector, but in recent years struggled to keep pace with changing tastes as cost-conscious shoppers kept a lid on spending.
Jeffries, 70, stepped down this month as chief executive, a position he had held since February 1992. Abercrombie had in January stripped him of his role as chairman.