Abercrombie & Fitch CEO Mike Jeffries paid millions to stop flying

Jeffries compensation for 2009 has yet to be revealed, but his performance as CEO has earned him zero accolades due to the fact that Abercrombie is on life-support. During his tenure as CEO, poor decisions have caused company stock to lose 56% of its value. 

It is hard to believe, but Abercrombie's 2009 profit amounted to a meager $254,000. How does a company go from earning a 2008 profit of $273 million to barely breaking even? And, how can one man's travel expenses be five times higher than the company's total profit for a single year?

Despite Jeffries' incompetence, his contract with Abercrombie & Fitch does not expire until 2013. One has to wonder what goes on behind the closed doors of corporate America when under-performers like Jeffries are allowed to continue working when any ordinary worker would have been summarily fired. But, even more astonishing is the "solution" Abercrombie's compensation committee dreamt up to offset Jeffries obvious inability to curb his own spending. 

Abercrombie's compensation committee is made up of three very privileged plutocrats: Lauren Brisky, the former chief financial officer at Vanderbilt University, Edward Limato, agent for Hollywoodhotshots like Mel Gibson and Denzel Washington, and Craig Stapleton, the former U.S. ambassador to theCzech Republic and France under the George W. Bush Administration. [Time]

The compensation committee took the hard-line step of rescinding Jeffries absurd travel perk - the company will no longer pay for unlimited travel on the company's private jet.  Instead, they will cap reimbursements for their venerable CEO's personal travel at $200,000. A sum three times what the average American earns per year.

That's not all, the compensation committee's genius solution to curb Jeffries insatiable travel needs includes a "contract amendment" reward for "eliminating" this perk - if you can somehow rationalize that a $200,000 allotment for personal travel is not a perk?.  Because Jeffries is being such a good sport by sacrificing his unlimited travel perk, the committee saw fit to give him additional lump-sum payment of $4 million to stop joy-riding in the company jet.

Over the final four years of his contract, he is being given $200,000 in personal travel vouchers per year plus an additional $1 million per year to stop flying. How does this benefit the company? Simple math reveals that their solution only saves the company $100,000 per year, but preserves their CEO's absurd pleasure travel appetite.

What do they cover for business-related travel?  And, when does this clown work if he's racking up $1.3 million worth of frequent flyer miles per year?  Not to mention, if American Express is matching each dollar spent with an additional frequent flyer mile, he will also accumulate 2.6 million FFMs he can redeem for free travel. 

Sounds to me like Jeffries is a mileage addict ... or just a dick for not turning down the lump-sum payment. Probably, both. Either way, this "solution" is preposterous and it doesn't take more than a moment's thought to arrive at the foregone conclusion that corporate managers are completely bankrupt.