This morning Bloomberg reported that Abercrombie & Fitch
) CEO Michael Jefferies—who has led the retailer for nearly two decades—has announced that he intends to sell as much as 1.79 million of his shares. At current market value, a sale of that magnitude would net him nearly $63 million pre tax. This appears to be a similar move to Ralph Lauren's recent announcement of a major share sale in Polo Ralph Lauren
), and with capital gains taxes likely on the rise, these sales could potentially save millions in capital gains taxes.
Apparently, Mr. Jefferies is undeterred by an investigation by an executive compensation watchdog group, The Shareholders Foundation, on behalf of long term shareholders. They claim that ANF's management compensation has been excessive and has breached their fiduciary responsibilities. At Ockham, we are not shareholders of ANF nor do we know whether or not the investigation has merit or will lead to legal action, but it does at least demonstrate some level of dissatisfaction between shareholders and management performance. Their press release states,
While Abercrombie & Fitch Co. reported decreasing revenue and decreasing Net Income along with experiencing lower stock value, its CEO Michael S Jeffries, who runs the label since 1992, received in 2008 a 5year Compensation Total of $184.87 mil, or an average of almost $37million per year. In April 2010 Abercrombie & Fitch Co. announced in a SEC filing that it entered into an amendment to the employment agreement with its CEO Michael Jeffries to limit his unlimited personal use of Company aircraft. Previously, Mr. Jeffries was entitled to unlimited personal use. From 2006 to 2008, he booked an average of about $850,000 a year worth of personal travel on the corporate jet. In 2008 alone, he tallied roughly $1.1 million worth of personal travel on the jet. In exchange for agreeing to the limitations, Mr. Jeffries will receive a lump-sum payment of $4 million from Abercrombie & Fitch Co. In May 2010, Abercrombie and Fitch announced that the Fiscal 2009 total compensation for Mr. Jeffries was $36.3million.