Abercrombie & Fitch CEO gets $4m to curb jet use
Thursday 15 April 2010
Abercrombie & Fitch is paying its chief executive $4m (£2.5m) to compensate him for curbing his use of the company's corporate jet.
The US preppy fashion retailer has altered the employment contract of Michael Jeffries, who is also its chairman, to limit his use of the aircraft to $200,000 a year. If he exceeds this amount, he must reimburse Abercrombie & Fitch.
His use of the aeroplane cost $1.1m in 2008 and averaged $850,000 a year between 2006 and 2008. But Mr Jeffries would have to pay back a "pro-rata portion" of the lump sum if he quits before 1 February 2014, according to a filing at the US Securities and Exchange Commission this week.
Mr Jeffries is not alone in enjoying the luxury of a corporate aircraft, although many firms have trimmed their usage in recent years.
Arguably the most notorious example was in November 2008, when the three chief executives of the ailing automotive companies General Motors, Ford and Chrysler flew into Washington on separate aircraft for crunch negotiations with the US government about bailing out the car industry. Following a public outcry, the three travelled by car to subsequent meetings.
In Britain, Chris Ronnie, the former chief executive of JJB Sports, came under scrutiny for his use of the company aircraft during his troubled tenure at the chain between June 2007 and early 2009.
After he left, JJB came close to collapse in the spring of last year but was saved through a series of restructuring measures.
Mr Jeffries has been chief executive of Abercrombie & Fitch since 1992 and is credited with turning around its fortunes by focusing on colourful and fashionable clothing for young people. He received a pay packet of $23.4m in 2009, boosted by performance-related bonuses and share awards.
In the year to 30 January this year, group sales at Abercrombie & Fitch tumbled by 16 per cent to $2.93bn.
In 2007, the company opened its first European store on the corner of Savile Row in London. The shop's heavily scented interior and pumping music has been compared to a nightclub. It attracts snaking queues of teenage girls who often take photos of its topless male models on the front door.
Abercrombie & Fitch also courted controversy for its policy of employing staff who look like models. In 2009, it paid a former employee with a prosthetic arm £9,000 for unfair dismissal.
Abercrombie & Fitch's stablemate, the fashion brand Hollister, has 13 branches across Britain.
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