Abercrombie Shares Rise As Board Alters MakeupJanuary 29, 2014 – In The News
Ted D. Rosen was quoted in the Women’s Wear Daily article “Abercrombie Shares Rise As Board Alters Makeup.” While the full text can be found in the January 29, 2014, issue of Women’s Wear Daily, a synopsis is noted below.
The board of Abercrombie & Fitch Co. has split the positions of chairman and chief executive officer and named Arthur Martinez non-executive chairman. Michael Jeffries, who had been chairman for 18 years, remains CEO and a director.
The retailer also increased the number of board members to 12 and ended its shareholder rights plan, more often referred to as a poison pill, which is used as an antitakeover defense.
Rosen said, “The Abercrombie board followed what good corporate governance guidelines recommend. They separated out the roles of chairman and CEO, added new independent directors and did away with the poison pill. They also [earlier] tied Jeffries’ pay to his performance, putting the CEO’s feet to the fire. If he performs, he is paid well, and if not, his compensation for someone at that level will be less than adequate, which could be an incentive in itself.”
Rosen added that one of the problems with executives who are entrenched in their companies is that they sometimes “control the board too much.”
He also noted that with the ending of the poison pill, it could mean that the company “may be looking to be sold, and that they’re not going to be hostile to a takeover. You now have independent board members who are in the best position from a fiduciary duty standpoint to analyze any bids. For stockholders, that’s a very good thing.”