The Job That Keeps Paying

Imagine this: You quit your job because you landed a great new gig. To prove there are no hard feelings, your soon-to-be past employer gives you your entirely yearly salary and a few added perks to boot. Sound like a pipe dream? Not at Abercrombie & Fitch (NYSE: ANF  ) , apparently.

Abercrombie & Fitch's Chief Financial Officer Michael Kramer is leaving the company to become CEO of privately held Kellwood. On a related Form 8-K filing, I noticed that Kramer will be paid the equivalent of 12 months of base salary, a whopping $775,000. He will receive earned incentive compensation as of July 21, and accelerated vesting of some outstanding stock awards, along with the continuation of some health-care benefits.

In connection with the agreement, he agreed to a nondisclosure covenant, a 12-month non-competition covenant, and a 24-month non-solicitation covenant. I should hope so!

Retailers have seen their fair share of flux lately. American Eagle Outfitters (NYSE: AEO  ) recently lost a high-profile executive, while Hot Topic (Nasdaq: HOTT  ) lost one of its own after only a month. The latter company seems similarly prone to rewarding departures; in June, my Foolish colleague Rich Duprey revealed that that Hot Topic extended the "post-termination exercise period" for options. Perhaps not coincidentally, several of its directors had said earlier this year that they weren't standing for re-election. Talk about the gift that keeps on giving!

According to a MarketWatch article I saw, analysts considered Kramer the voice of the company for investors. I was reminded of last year's unimpressive news that Abercrombie's CEO Michael Jeffries couldn't really be bothered to sit in on quarterly conference calls with analysts. Guess who handled those calls? Mr. Kramer, now exiting stage left.

Abercrombie shares have dropped today as investors contemplate what's next; Kramer was obviously an important figure. For those of us who get worked up about runaway executive compensation, a job that keeps on paying -- big-time! -- after any employee voluntarily leaves sounds somewhat insulting to shareholders. As for Abercrombie, I still wouldn't buy it.

Further finely dressed Foolishness:

American Eagle Outfitters is a Motley Fool Stock Advisor pick. The Fool owns shares of American Eagle. Try any of our Foolish newsletters today, free for 30 days.

Alyce Lomax does not own shares of any of the companies mentioned. The Fool has a disclosure policy.


Read/Post Comments (0) | Recommend This Article (6)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

DocumentId: 693108, ~/Articles/ArticleHandler.aspx, 4/17/2014 2:40:53 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement