Abercrombie & Fitch chief executive Mike Jeffries has signed a new contract despite shareholders calling for him to be replaced.
The young fashion group has been delivering weakened results of late, with three consecutive quarters of sales declines. In August Abercrombie reported a 10% fall in like-for-like sales in the second quarter of the year, with the teen clothing business blaming both a drop in footfall and weaker demand from its female customers.
Abercrombie investor Engaged Capital, which owns less than 1% of the company, has urged the business to start searching for a new chief executive and consider selling itself to private-equity buyers, arguing the company’s “perennial underperformance is a result
of a failure of leadership”.
However, Jeffries has signed a new agreement, which will begin after his current contract ends on February 1. He will receive an annual base salary of $1.5m (£912,000) with the possibility of other annual bonuses reaching $4.5m and long term incentive awards at a target value of $6m (£3.6m).
Craig Stapleton, lead independent director of the board, described Jeffries as “a visionary in this industry”.
“Under his direction,Abercrombie & Fitch has grown from just 36 domestic stores and $50 million in sales in 1992 to having a global presence and over $4bn in sales today,” he added. “Mike and his team have developed a long-term plan that builds upon past successes, while targeting the specific challenges that the company faces today. We believe he is the right person to embark on this plan, which we believe will deliver substantial and sustainable value.”
Abercrombie also revealed it is beginning the process of recruiting for three new brand presidents for each of its Abercrombie & Fitch, Abercrombie Kids and Hollister lines as part of its succession planning. Search firm Herbert Mines Associates has been brought on to assist on this.