Bloomberg BNA’s Corporate Law & Accountability Report is available on the Corporate Law Resource Center. This news service keeps corporate practitioners informed of legal developments of...
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.
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. Abercrombie is one of 11 companies in the Russell 3000 Index that failed to win majority shareholder support for pay practices in nonbinding votes for their two most recent fiscal years, according to data compiled by Bloomberg.
To contact the reporter on this story: Michael Greene in Washington at firstname.lastname@example.org
To contact the editor responsible for this story: Ryan Tuck at email@example.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.
The report and recommendation is available at http://www.bloomberglaw.com/public/document/The_City_of_Plantation_Police_Officers_Employees_Retirement_Syste/3.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to firstname.lastname@example.org.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to email@example.com.
Put me on standing order
Notify me when new releases are available (no standing order will be created)