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By Zain Griffith

It pays well to work at Abercrombie & Fitch (ANF), especially if you’re CEO Mike Jefferies. According to a report recently cited by The Deal, Jefferies received $71.8 million in total compensation in 2008—making him the 10th highest paid CEO in the U.S. My initial reaction to the report was to check the company’s recently filed DEF 14A to determine whether this large sum was correct.

A cursory review of the document would be very misleading. On page 40, under “Fiscal 2008 Summary Compensation Table,” the data table provided states that Jefferies was paid a total of $26.2 million, $11.5 million, and $15.9 million in FY 2006-08. The 2008 breakdown follows:

Fiscal 2008 Summary Compensation Table

Fiscal Year

Salary

($ M)

Stock Awards

($ M)

Option Awards

($ M)

1Non-Equity Incentive Comp.

($ M)

2Other

($ M)

Total

($ M)

2008

1.50

5.32

.30

6.48

2.32

15.91

1 Includes a $6 million “stay bonus” for remaining employed by the Company in the capacity of Chairman and CEO through December 31, 2008.

2 Includes $1.1 million in aggregate incremental cost for personal use of Company-owned aircraft.

After glancing at the table, one would assume that Jefferies was “only” paid about $16 million in 2008. By digging a little further into the filing, one would learn that Jefferies had recently signed a new employment agreement with the company on December 19, 2008. Under this agreement, Jefferies was awarded 4 million stock appreciation rights (SARs), 40% of which (1.6 million) were awarded on the signing date with exercise prices ranging from $22.84 to $41.11. Assuming the options are exercised at their respective prices, they would be worth about $45.68 million.

Is Mike Jefferies worth $71.8 million? That’s a very difficult question to answer and I will leave it up to the reader to decide. I would like to point out that Jefferies has an outstanding track record of creating shareholder value at ANF. Jefferies has been with the company since it was bought out of bankruptcy by The Limited in 1988. Over that time period, he has created one of the most enviable brands in the specialty retail space and the company has averaged after-tax returns on invested capital in excess of 30%.

Disclosure: No positions.

Source: High Executive Pay Not Out of Style at Abercrombie & Fitch