Abercrombie & Fitch 2012 Annual Report Download - page 56

Table of Contents
Compensation and Benefits Structure
Pay Level — Determination of the appropriate pay opportunity
Pay levels for all associates of the Company, including the NEOs listed in the "Fiscal 2011 Summary Compensation Table" on page 56, are based on
a number of factors, including each individual's role and responsibilities within the Company, current compensation, experience and expertise, pay levels in
the competitive market for similar positions, internal pay equity relationships including those between the executive officers and the CEO and the
performance of the individual, his/her area of responsibility and the Company as a whole. The Compensation Committee approves the pay levels for all the
executive officers. In determining the pay levels, the Compensation Committee considers all elements of compensation and benefits.
The primary data source used in setting competitive market levels for the NEOs is information publicly disclosed by the peer retail companies listed
below, based on a comparison prepared annually by the independent compensation consultant to the Committee. The Compensation Committee does not
precisely benchmark each NEO's compensation to defined market level, but it does review market information as a general reference. In a given year, the
Committee may engage in a more detailed review which may result in significant adjustments to a given executive officer's compensation. Actual total
compensation in a given year will vary above or below the individual's target compensation levels based primarily on the attainment of overall Company
financial goals and the creation of stockholder value.
The peer retail companies used by the Compensation Committee in determining the "competitive market" with respect to Fiscal 2011 compensation
decisions are included in the table below. The peer group used for Fiscal 2011 compensation decisions was reviewed in January 2011 but remained unchanged
from the group used for Fiscal 2010 compensation decisions.
Aéropostale, Inc. American Eagle Outfitters, Inc.
Ann Inc. (formerly AnnTaylor Stores Corporation) Coach, Inc.
The Gap, Inc. Guess?, Inc.
J.Crew Group, Inc. The Jones Group Inc.
Kenneth Cole Productions, Inc. Limited Brands, Inc.
Liz Claiborne, Inc. Nordstrom, Inc.
Ralph Lauren Corporation Quiksilver, Inc.
Saks Incorporated The Talbots, Inc.
Tiffany & Co. The Timberland Company
Urban Outfitters, Inc. Williams-Sonoma, Inc.
As of the end of Fiscal 2011, the sales for the peer group ranged from $976 million at the 25th percentile to $3.879 billion at the 75th percentile; and
market capitalization for the peer group ranged from $977 million at the 25th percentile to $8.976 billion at the 75th percentile. The Company fell at the 79th
percentile of the peer group for sales and the 65th percentile for market capitalization. As noted above, the peer group was revised in Fiscal 2012 to put the
Company closer to the median of the group in terms of sales and to implement other changes based on size, business focus and location.
Employment Agreements, Severance and Change-in-Control Benefits
The Compensation Committee carefully considers the use and conditions of employment agreements. The Compensation Committee recognizes that, in
certain circumstances, formal written employment contracts are necessary in order to successfully recruit and retain senior executive officers. Currently, only
Mr. Jeffries, the CEO, has such an employment contract, the material provisions of which are described in the section captioned "Employment Agreement
with Mr. Jeffries" beginning on page 58. The Compensation Committee believes it is in the best interest of the Company to ensure that Mr. Jeffries'
employment is secured through the use of a contract. Although the Company has existed for more than 100 years, Mr. Jeffries' role is more akin to founder
than a typical chief executive officer. His vision has transformed the Company into one of the most successful and widely-known specialty retailers.
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