Engaged Capital’s Glenn Welling, who last week fired off a nine-page open letter to Abercrombie’s board, calling for the ouster of CEO Mike Jeffries, was “disturbed” to learn that the retailer chose to extend the executive’s contract today.
Abercrombie said earlier today that it signed a new agreement with the 69-year-old Jeffries, whose previous contract was set to expire on Feb. 1. Jeffries, considered Abercrombie’s modern-day founder, has been the subject of controversy this year, and, according to Welling, is the cause of the retailer’s free-falling stock price, dismal same-store sales and off-trend fashions.
“We are disturbed that upon learning of broad shareholder support for change in Abercrombie’s leadership, the board’s reaction was to ignore the information and re-sign Mr. Jeffries,” Welling, the chief investment officer and managing member of Engaged said in a statement e-mailed to BuzzFeed. “This decision appears to be made without any substantive discussion with shareholders – a rushed response, less than one week after receiving our letter. We consider this an outright dereliction of the board’s fiduciary duties. This action is further proof that our board exists to serve one master, Mr. Jeffries, instead of the shareholders that elected them.”
Welling hinted at some kind of action going forward.
“In light of the board’s troubling actions, Engaged Capital is considering all options available to it as shareholders in order to hold the Board accountable for its decisions,” he wrote.
Engaged said last week that it holds 400,000 shares of Abercrombie, less than 0.5% of outstanding shares.