Announcing a major change in its corporate governance, Ohio-based teen apparel retailer Abercrombie & Fitch Co. (ANF) yesterday relieved its present Chairperson and Chief Executive Officer (CEO), Mike Jefferies, from his duties as Chairman. The move is a result of continued pressure from activist investor, Engaged Capital LLC, to reduce Jefferies' hold on the company. After joining Abercrombie & Fitch in 1992, Jefferies went on to make the company a trendy premium brand for teenagers from merely a sports brand. However, he failed to adapt it to the changing retail environment, which consequently led the company to lose its market share to other teen retailers like Forever 21 and Inditex's Zara. Jefferies has also faced criticism over his comments on the type of customers that the company is keen on attracting as it does not provide merchandise for plus size people. Investors also voiced their concern regarding his strategies, which were focused primarily on slashing costs rather than improving the top line. The company has appointed Arthur C. Martinez, former board member of PepsiCo Inc. (PEP), as Non-Executive Chairman. Martinez possesses considerable experience in the field, having worked with companies like Sears, Roebuck and Co., American International Group Inc., IAC/Interactive Corp., Fifth & Pacific Companies Inc. (formerly Liz Claiborne), International Flavors & Fragrances Inc. and HSN Inc. Apart from this, management has appointed two other members to its board, thereby increasing the strength to 12. The additional members are Terry Burman and Charles R. Perrin. Currently, Mr. Burman is the Chairman of Zale Corp. (ZLC) and has commendable expertise in the retail industry. Earlier, he was appointed to the boards of Barry's Jewelers Inc., Caesars World Inc., Unimax Corporation and Yankee Candle Co. He has also served as the CEO of Signet Jewelers Ltd. Perrin is on the board of Campbell Soup Co. (CPB), and has earlier served other majors companies like Avon Products Inc., Duracell Inc., Eastern Mountain Sports Inc. and Warnaco Group Inc. Abercrombie & Fitch has long been grappling with the decline in its top and bottom lines. The company posted disappointing sales results in third-quarter 2013, marking lower-than-expected sales for the fourth straight quarter. Moreover, the company's comparable-store sales for the quarter registered its third consecutive double- digit fall. Observing this, in Dec 2013, Engaged Capital urged the company to separate the roles of Chairman and CEO, and look for a new CEO. In addition, the investor advised cancellation of the shareholder right plan, also known as poison pill, and keeping options open for a takeover by private equity firms. In response to the views of Engaged Capital, the company declared the change in its corporate governance while doing away with the poison pill as well. The poison pill reduces chances of gaining control over a company by any person or group through accumulation of shares in the open market without appropriately compensating shareholders. Investors cheered over the company's recent announcement, as was reflected in its share price that gained 4.8% and closed at $36.27 yesterday. Read more: http://www.nasdaq.com/article/abercrombie- renews-corporate-appearance-analyst-blog- cm321998#ixzz2tRcwhrPV 1) Why would Abercrombie want to separate the roles of CEO and Chairperson of the Board of Directors - how could it potentially be beneficial? (3+ sentences) 2) How might increasing the size of the Board of Directors from 10 to 12 potentially be beneficial? (3+ sentences) 3) What role is Engage Capital taking in advocating for the reduction of Jefferies' power, the separation of the roles of CEO and Chairperson of the Board, and the cancellation of the poison pill plan? (2+ sentences) (Review concepts relating to "Market for Corporate Control" on pages 446-447 (Rothaermel 5th Ed) to help you answer this question). 4) Why might the stock price rise 4.8% in reaction to the announcement of the changes? (3+ sentences) 5) Using your phone, fill in the following table Price on Jan. 29, 2014 Price today Percentage increase from 2014 to today A&F S $ 96 S&P 500 index points points How has A&F stock performed relative to the S&P 500? What changes in the business general environment have significantly impacted the retail landscape since 2014?