Corporate Governance

Abercrombie, Compensation, and the Need for Access (Part 4)

By J Robert Brown Jr.

In an earlier post, we noted that the board paid the CEO of Abercrombie $4 million in return for the elimination of unlimited personal use of the corporate aircraft.  We noted that the total amount of personal use in the prior four years did not exceed $4 million ($3,188,191). 

While this is true as far as it goes, it does not tell the complete story.  A comment on the post notecd that it did not take into account the change in tax gross ups.  The agreement limiting personal use of the aircraft to $200,000 per year also eliminated tax gross ups in connection with this benefit.  (See 2009 Proxy Statement at 43).  The gross ups in 2009 were $170,046, $176,775 in 2008, $111,311 in 2007, and $184,790 in 2006 (for a total of $642,922).  When these are taken into account, the company paid out a total of $3,831,113, an amount closer to the value of the benefit (the $4 million paid by the board and the $800,000 of personal use still allowed).    

Full post as published by The Race to the Bottom on June 11, 2010 (boomark / email).