Abercrombie & Fitch 2012 Annual Report Download - page 62

Table of Contents
withholding obligation payable in connection with the exercise of all or any portion of the Retention Grant) are generally subject to transfer restrictions such
that Mr. Jeffries must retain 50% of such shares until at least July 31, 2014 (six months following the end of the term of the Jeffries Agreement) and the
remaining 50% until January 31, 2015 (twelve months following the end of the term of the Jeffries Agreement).
In addition to the Retention Grant, Mr. Jeffries is also eligible to receive two equity grants in respect of each fiscal year of the term of the Jeffries
Agreement starting with Fiscal 2009 (the "Semi-Annual Grants"). Each Semi-Annual Grant will be awarded within 75 days following the end of the
Company's second quarter or the Company's fiscal year, as applicable, subject to Mr. Jeffries' continuous employment by the Company (and, with respect to
the final Semi-Annual Grant, continued service on the Board) through the applicable grant date. Semi-Annual Grants for periods ending on or prior to July 31,
2011 were in the form of SARs with an exercise price equal to the fair market value of the Company's Common Stock on the grant date. Semi-Annual Grants
for periods ending after July 31, 2011 may, at Mr. Jeffries' election, be in the form of SARs, stock options, restricted stock, restricted stock units or a
combination thereof. However, on May 7, 2012, Mr. Jeffries agreed to amend the Jeffries Agreement in Amendment No. 3 thereto that 80% of the total fair
value of any Semi-Annual Grants earned during the remaining term of the Jeffries Agreement will be awarded in the form of SARs and 20% will be awarded
in the form of restricted stock units. In addition, the restricted stock units will be subject to the same target and threshold adjusted earnings per share
performance levels that apply to performance shares granted to our Executive Vice Presidents, as well as the time-based vesting requirements specified in the
Jeffries Agreement. Under Amendment No. 3 to the Jeffries Agreement, 100% of the restricted stock units will be eligible to vest if the target adjusted
earnings per share performance level is achieved or exceeded. Only 50% of the restricted stock units will be eligible to vest if only the threshold adjusted
earnings per share performance level is achieved and 50% of the restricted stock units will be forfeited. Interpolation will be used to determine the percentage
of the restricted stock units that will be eligible to vest if adjusted earnings per share are between the threshold and target performance levels. If actual
adjusted earnings per share are less than the threshold adjusted earnings per share performance level, Mr. Jeffries will forfeit 100% of the restricted stock
units.
The value of each Semi-Annual Grant will be equal to 2.5% of the total stockholder return over the applicable semi-annual measurement period ("Semi-
Annual TSR") (as defined in the Jeffries Agreement), less any cash compensation payable to or earned by Mr. Jeffries and any increase in Mr. Jeffries'
pension benefits accrued with respect to the semi-annual period to which the Semi-Annual Grant relates. In no event will the Semi-Annual TSR exceed 25%
of the Company's Adjusted Operating Income (as such term is defined in the Jeffries Agreement). If the grant value of a Semi-Annual Grant is less than or
equal to zero for any semi-annual period, no Semi-Annual Grant will be made and the amount by which the value is less than zero will be carried forward to
the next semi-annual period. Each Semi-Annual Grant vests in four equal annual installments subject to Mr. Jeffries' continuous employment with the
Company; provided, however, that, as discussed above, any Semi-Annual Grants made during the remaining term of the Jeffries Agreement in the form of
restricted stock units will also be subject to the same target and threshold adjusted earnings per share performance levels that apply to performance shares
granted to our Executive Vice Presidents. In addition, all unvested Semi-Annual Grants will become vested on February 1, 2014 so long as Mr. Jeffries
remains continuously employed by the Company through that date, subject to the "end-of-term vest test" (as described in the Jeffries Agreement). SARs
awarded pursuant to the Semi-Annual Grants expire on December 19, 2015, unless Mr. Jeffries is earlier terminated by the Company for cause, and all Semi-
Annual Grants are subject to a clawback should Mr. Jeffries breach certain sections of the Jeffries Agreement. Mr. Jeffries did not receive any remuneration
from the Company in exchange for agreeing to Amendment No. 3 to the Jeffries Agreement.
The Jeffries Agreement continues to provide for term life insurance coverage in the amount of $10,000,000. Pursuant to the Jeffries Agreement,
Mr. Jeffries will be entitled to the same perquisites afforded to other senior executive officers.
Under the Jeffries Agreement, the Company provides Mr. Jeffries, for security purposes, the use of Company aircraft for business and personal travel
both within and outside North America. Pursuant to Amendment No. 1 to the Jeffries Agreement (entered into on April 12, 2010), commencing with Fiscal
2010, to the extent the aggregate incremental cost to the Company of Mr. Jeffries' personal use of Company aircraft in any fiscal year exceeds $200,000,
Mr. Jeffries will reimburse the Company for the amount by which his personal
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