Abercrombie Shares Are Tanking After Company Renews Contract Of Embattled CEO Michael Jeffries

Abercrombie & Fitch shares are falling after the company announced it was renewing the contract of controversial CEO Michael Jeffries.

Shares fell more than 2%.

Investors reportedly wanted Jeffries out as sales have continued to fall and public perception of Abercrombie has soured.

"Given the Company's history of operational missteps, taken together with Mr. Jeffries' age and his increasingly controversial reputation, the Board must not let this opportunity pass," investor and Engaged Capital Managing Director Glenn W. Welling wrote in a letter last week.

Abercrombie's U.S. sales fell a whopping 18% in the third quarter. Shares have fallen 26% in the last year.

The contract includes some caveats. Jeffries' compensation will be more performance-based, and the company will begin a succession plan to replace the 69-year-old CEO in coming years.

Jeffries has also been criticized this year for his comments about only wanting "cool kids" to wear the brand's clothes. Business Insider was the first to report that the company didn't offer larger sizes for women.

After the backlash, the company announced it would start offering larger sizes.

Craig Stapleton, the director of Abercrombie's board, defended Jeffries in the company's release.

"Mike is a visionary in this industry and has been responsible for reinventing, creating and evolving today's Abercrombie & Fitch and Hollister brands. Under his direction, Abercrombie & Fitch has grown from just 36 domestic stores and $50 million in sales in 1992 to having a global presence and over $4 billion in sales today," Stapleton said.