Abercrombie Settles Suit Related to CEO Comp. Claims

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By Michael Greene

Jan. 12 — A U.S. District Court for the Southern District of Ohio judge Jan. 8 approved a settlement in a derivative lawsuit alleging that Abercrombie and Fitch Co. CEO Michael S. Jeffries was granted excessive compensation in light of “the company's declining financial performance.”

The complaint alleged that Jeffries had received $140 million in compensation since 2008, despite the fact that Abercrombie was outperformed by its industry peer group by 369 percent and by the S&P 500 Apparel Retail Index by 321 percent during that time.

According to a Dec. 30 report and recommendation by U.S. Magistrate Judge Norah McCann King, which was approved by District Judge James L. Graham, the company is required to adopt reforms “in the areas of ethical and compliance management” and “internal controls.”

Although the settlement lacks any monetary compensation to shareholders, it requires the company to pay $1.6 million in attorneys' fees to the plaintiff's counsel.

The court rejected an Aug. 29 proposed settlement because the plaintiff had failed to provide fair consideration to absent shareholders in exchange for a broad release of claims. The approved settlement only releases shareholders with derivative claims, not those with direct claims.

Controversial CEO

Jeffries retired Dec. 9, clearing the way for any suitors interested in the teen retailer. As the $2 billion chain has lost appeal among teens, Abercrombie's stock price has also deflated and even attracted activist shareholders.

In May 2014 , the company's board significantly reduced Jeffries' pay in an attempt to appease shareholders, who twice slammed its executive pay structure.

Jeffries was paid $48.11 million in 2011, but only received $2.24 million from the company in 2013 and $8.16 million in 2012.

To contact the reporter on this story: Michael Greene in Washington at mgreene@bna.com

To contact the editor responsible for this story: Ryan Tuck at rtuck@bna.com

The order and final judgment approving the settlement is available at http://www.bloomberglaw.com/public/document/The_City_of_Plantation_Police_Officers_Employees_Retirement_Syste/3.