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Abercrombie & Fitch recently tried to settle a lawsuit that a company shareholder filed with A&F over CEO Mike Jeffries's steep compensation despite poor job performance, but the federal judge presiding over the case is having none of it. The lawsuit claims that Jeffries's work performance isn't worth the $140 million in wages plus extensive travel compensation that the company shelled out for its CEO since 2007. (As Time explains, Jeffries's travel—including usage of the company's private plane—cost A&F $1.3 million in 2008 alone.)
According to Reuters, the proposed settlement called for governance changes (including instating a chief ethics and compliance officer, monitoring pay more closely in relation to job performance, and limiting access to nonpublic data by Jeffries' partner) but mentioned nothing regarding monetary payment or admission of wrongdoing, The shareholder and A&F were ready to settle on the lawsuit, but the settlement had to gain approval from the court in order to move forward. Yesterday, Reuters reported that the settlement had been rejected by U.S. District Judge James Graham, who viewed it as too easy of an escape for both parties.
"The court is unable to conclude that the proposed settlement treats absent shareholders fairly," Graham wrote in a statement. "The court's fundamental concern is that, given the seriousness of the allegations ... the proposed settlement broadly releases shareholders' claims for little, if any, consideration and provides no monetary compensation to the company."
· Judge rejects settlement over Abercrombie & Fitch CEO pay [Reuters]
· Abercrombie's New Strategy is No Logos [Racked]
· Abercrombie Wants You to Know They Follow Trends Now [Racked]