Abercrombie Shares Drop After Renewing CEO Contract

12/9/13 12:44PM EST

Abercrombie Shares Drop After Renewing CEO Contract Abercrombie Shares Drop After Renewing CEO Contract

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Abercrombie & Fitch (NYSE:ANF) is facing lower share prices after it announced this morning that it would renew the contract of its controversial Chief Executive Officer Michael Jeffries. The company’s press release states that Jeffries has received a “new and restructured employment agreement,” which will take effect when his current contract expires on February 1, 2014.

The press release seems to focus largely on defending the company’s decision amidst criticism. “Mike is a visionary in this industry and has been responsible for reinventing, creating and evolving today’s Abercrombie & Fitch and Hollister brands,” said Craig Stapleton, Lead Independent Director of the Board, according to the press release. “Under his direction, Abercrombie & Fitch has grown from just 36 domestic stores and $50 million in sales in 1992 to having a global presence and over $4 billion in sales today.”

The statement also explains that Jeffries’ compensation plan will be restructured. “The new agreement employs a more simplified, performance-based compensation structure that is designed to align incentives closely with the success of the company and the interests of shareholders,” Stapleton said.

Despite the minor changes, the public and investors are unhappy about the announcement that Jeffries will stay on as CEO. Just last week, Abercrombie shareholder Engaged Capital LLC called for a new CEO, saying the company’s recent underperformance as a retailer can be traced back to Jeffries’ “failure of leadership.” The company’s U.S. sales have fallen 26 percent in the last year alone.

The unpopular decision is already making an impact on Abercrombie’s stock price. It closed at $34.87 per share on Friday and as of this writing, Abercrombie stock has fallen 3 percent to a price of $33.83.