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Michael Jeffries, chief executive officer of

Abercrombie & Fitch

(ANF) - Get Free Report

, is getting rewarded richly for his service, but the best is yet to come.

In a new employment agreement awarded last month to Jeffries, who also serves as Abercrombie's chairman, the apparel chain increased his base salary to $1 million per year, raised his potential annual bonus to $2.4 million and agreed to provide him with a private aircraft for his business and personal travel.

But the better perks come if he leaves the company. As long as he's not fired for cause, Abercrombie agreed to pay Jeffries a $12 million bonus and up to 1 million shares of stock, worth some $29 million at current prices, if he is terminated before the end of the contract. Additionally, under a retirement plan included in the new contract, Abercrombie agreed to pay Jeffries, 58, a monthly benefit for the rest of his life of up to 50% of his final monthly compensation, which includes salary and bonus.

Abercrombie released Jeffries' contract in a document filed with the

Securities and Exchange Commission

on Wednesday. The company revised his contract in order to ensure that he will stay with Abercrombie through 2008, when the contract expires, Abercrombie said in the filing.

"The Board of Directors of the Company has determined that it is in the best interest of the Company to secure the continued services and employment of the executive for the balance of the executive's career," Abercrombie said in the agreement.

Abercrombie representatives did not immediately return calls seeking comment.

Jeffries joined Abercrombie in 1992 as the company's president and chief executive officer. He shed the president title and took on the chairman's mantle in 1998.

Last year Jeffries earned $997,115 in salary and $854,400 in bonus. Abercrombie also paid him 21,360 shares of restricted stock and contributed $255,003 to his retirement plan.

Additionally, Jeffries exercised stock options worth $6.7 million. As of Feb. 2, 2002, Jeffries had about $25.8 million in exercisable stock options.

Jeffries' tenure at Abercrombie & Fitch has been largely positive. The company has posted 41 consecutive quarters of year-over-year earnings per share growth. Since 1997, the company has expanded from 127 stores to 491.

But as the company has expanded, its same-store sales have suffered. Same-store sales measure results at stores open for more than one year. Prior to January, Abercrombie had posted flat or declining same-store sales for nine straight months and in 19 of the previous 20.

Jeffries signed his previous contract with Abercrombie in May 1997. Under that agreement, Jeffries' base salary was set at $600,000 per year, with a bonus equal to at least 100% of his base salary. That original contract was set to expire this May.

Jeffries' retirement benefit and stock award will be decreased if he leaves the company before 2008. For instance, if he retires at age 62, Jeffries will only receive a retirement benefit of 40% of his final compensation.