A&F extends current CEO's contract

Teen retailer Abercrombie & Fitch (A&F) have decided

to extend CEO Mike Jeffries's contract by a year after its expiration date passes next year February. This decision comes barely a week after A&F shareholder Engaged Capital, who own 0,5 percent of A&F shares, requested that the teen apparel retailer find a replacement for Jeffries once his contract had ended.

Engaged Capital believes that Jeffries current role as CEO is “a major stumbling block” to the possible sale of the 4.5 billion dollar (3.3 billion euro) company and asked for his dismissal. However A&F have chosen to enter into a new agreement with Jeffries that stipulates after a year, the contract can be ended by either party and includes a 12 month grace period.

The new contract terminates the semi-annual grants that were included in Jeffries previous agreement with A&F and introduces long-term awards based on incentives. The company also announced plans to take on brand presidents for A&F, Abercrombie Kids and Hollister brands to aid the company roll out its succession strategy.

Engaged Capital is not pleased with the new agreement. Managing director, Glenn Welling wrote in a statement: “This decisions appears to be made without any substantive discussion with shareholders – a rushed response, less than one week after receiving our letter.”