Abercrombie & Fitch (NYSE: ANF) posted an unusually strong quarter, and its stock rose from $31 to $42 in two days as a result. CEO Mike Jeffries took much of the credit, as he should have. Net income in the most recent reported period jumped from $50.9 million last year to $71.5 million.

However, the results do not negate the years of weak results and high CEO pay that have dogged Abercrombie & Fitch stockholders as its shares have fallen nearly 50% over the past five years. Jeffries has become extraordinarily rich during that period. Obviously, investors have not.

Abercrombie & Fitch posted net income of $476 million in its 2008 fiscal year. That dropped to near zero in fiscal 2010. In the most recent fiscal year, net income only recovered to $128 million. Taken as a whole, a dismal performance for the company. But Jeffries has prospered.

The most recent Abercrombie & Fitch proxy shows that Jeffries made $48.1 million, which is staggering, particularly given the firm’s size. More extraordinarily, he made more than $107 million in the three years reported in the proxy. Perhaps Jeffries would argue that he deserves his compensation because, as the proxy reports:

Mr. Jeffries is not only the “founder” of the modern day Abercrombie & Fitch brand but also the creator of each of the Hollister, abercrombie kids and Gilly Hicks brands.

He should have been paid for those accomplishments in the years when they happened. Jeffries has been the firm’s CEO since 1992, and he may believe he should get some special consideration for that.

Jeffries is the best example of public company CEOs who are overpaid for underdelivery. Some of that was lost when Abercrombie & Fitch posted its good quarter. But it was one good quarter, not a string of very good years. A string might justify part of Jeffries pay packages, but then there has not been a string at all.

Douglas A. McIntyre

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