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That CEO Makes How Much?

Alyce Lomax
September 2, 2009

Did anyone at Abercrombie & Fitch (NYSE: ANF  ) bother to consult a stock chart before deciding on CEO Mike Jeffries' compensation?

Jeffries lands at No. 10 on the list of 2008's highest-compensated CEOs, according to The Corporate Library. His lofty reward for a year marked by disastrous results at his company only emphasizes CEO pay's continuing disconnect from anything resembling reality.

Where's the performance?
Jeffries raked in $72 million in 2008, according to The Corporate Library's list. It calculated "total realized compensation," which includes vested shares of restricted stock and stock options that were exercised. In Abercrombie's proxy statement, Jeffries' compensation -- excluding these items -- is listed as $15.9 million.

Abercrombie & Fitch's business has been in the doldrums for quite some time now; its shares fell 70% in 2008. Sales growth has slowed dramatically since the fiscal year ended January 2006, actually decreasing in the latest completed fiscal year. Meanwhile, earnings per share have fallen steadily since the year ended February 2008. If Jeffries' pay is commensurate with his performance, I'm just not seeing it.

Retail reality disconnects
Many retail CEOs are still living large despite their companies' lackluster 2008 performance -- even by the simpler, less hair-raising standards of the compensation calculations available in 2008 proxy statements.

Consider Gap (NYSE: GPS  ) CEO Glenn Murphy's $9.3 million in total compensation, according to the most recent proxy statement. That's a 49% increase from last year. You may also have forgotten that RadioShack (NYSE: RSH  ) -- pardon me, "The Shack" -- even existed. Nonetheless, CEO Julian Day's total compensation rose 11% to $9.8 million.

Starbucks (Nasdaq: SBUX  ) missed a chance to shine recently, as it cut workers and only made slight cosmetic changes to executive pay. Talbots' (NYSE: TLB  ) made a sad and poor move when CEO Trudy Sullivan received a $1.2 million payout to offset reductions to her retirement plan, all while