People were surprised when Abercrombie & Fitch announced its decision to renew the contract of controversial CEO and Chairman Mike Jeffries. His loose cannon tendencies and the slowdown in growth in recent years have put a bad taste in the mouths of A&F shareholders. One investor even issued a nine-page, detailed letter urging the company to replace Jeffries, arguing that renewing his contract would be detrimental to the company's growth.
Just a little over a month after the details of Jeffries' new contract were revealed, Abercrombie has announced a few more corporate governance changes, one of which affects Jeffries role pretty significantly: The company has separated the CEO and chairman roles, taking the latter away from Jeffries and giving it to new board member, 73-year-old Arthur C. Martinez. Jeffries will continue on in his role as CEO and director. The company has brought in two additional new board members: Terry Burman and Charles R. Perrin.
Martinez already sits on the board of such companies as Fifth & Pacific and HSN, where he is currently chairman. Previously, he was the chairman and CEO of Sears, Roebuck and Co., and prior to that was vice chairman and a director at Saks Fifth Avenue.
"I have strongly supported the significant corporate governance enhancements the company has made in the past few years, and I am thrilled by the announcements we are making today," said Jeffries in a statement. "Arthur Martinez brings extensive sector expertise, deep boardroom experience and valuable perspectives to the new role of non-executive chairman."
Additionally, Craig Stapleton, Abercrombie's lead independent director since 2010, will no longer serve in that role but will stay on as a director and chair of the Nominating and Board Governance Committee. Stapleton said in a statement that the corporate governance statements were, at least in part, a response to "shareholder concerns."
It seems that so far, those shareholders are happy with Abercrombie's decision. Shares went up 6 percent this morning following the announcement.
It remains to be seen how these upper-level changes will aid in Abercrombie's much-needed turnaround. Of the three new board members hired, each one has extensive retail experience, though none specifically related to the teen space. It will be interesting to see what tactics they come up with to reel those elusive customers back in.