Abercrombie’s fat-cat culture bursts at seams

Abercrombie & Fitch (NYSE: ANF) will pay its CEO, Mike Jeffries, $4 million in one lump sum to limit his personal use of the corporate jet. Let that sink in for a minute.

His recently amended employment agreement requires that Jeffries now pay for any personal use of the jet over $200,000 per year, but that cool $4 million probably takes the sting out of having to muster some self-control.

How clueless is Abercrombie’s management and board? The personal use of corporate jets by a corporation’s top brass became emblematic of hubristic excess last year, when TARP recipients such as Citigroup and AIG scrambled to rein in luxury expenditures.

Does Abercrombie’s management take some kind of perverse pleasure from repeatedly poking shareholders straight in the eye? Jeffries was among the highest-paid CEOs in 2008, despite the fact that Abercrombie barely broke even in 2009.

According to several surveys, CEO pay has dropped overall for two years running. Jeffries’ pocketbook appears to have been somehow “recession-proof.”

Given Abercrombie’s indications of what really seems to matter to its top brass (themselves), investors would do well to stick to retail rivals such as Aeropostale and Buckle, both of which trade at cheaper multiples while operationally performing extremely well through the recession, to boot.

Ask the Fool

Q: Can I correct an error on a tax return I mailed in last month? If so, how? – W.T., Sacramento

A: The 1040 form you mail in is not the only one you can file for each year. You can file an amended return, via tax form 1040X – and you can even amend an amended return later.

Not all errors require amended returns, though. The IRS will often find and correct small math errors, and it might even accept your return if it’s missing a certain form or schedule. The errors that definitely require an amended return include ones involving your filing status, income, deductions or credits. Learn more, from the horse’s mouth at www.irs.gov, or at www.fool.com/taxes.

Q: With my initial stock investments, I’ve averaged gains of around 26 percent. This short-term success has made me wonder what average annual returns I can reasonably expect over, say, a 10-year period. Would 12 percent to 15 percent be overly optimistic? – H.C., Horseshoe Bend, Ark.

A: Over the very long haul (many decades), the stock market has gained about 10 percent annually, on average. That’s just an average, though, and over the 10 or 20 or 30 years in which you invest, you might average 7 percent, or 13 percent, or something else.

It takes a lot of skill and work to beat the market over the long haul, and even then, averaging 15 percent could be a tall order. For perspective, know that superinvestor Warren Buffett has averaged 20 percent over the past 44 years, versus 9 percent for the S&P 500. To meet the market, opt for broad index funds. To try to beat it, become a lifelong student of investing.

My dumbest investment

Between 2007 and 2008, I lost a lot in the Vanguard Precious Metals and Mining fund. There was a 1 percent redemption fee for selling within the first year, so I delayed selling and lost more. The experience soured me on mutual funds. Maybe I’m a control freak, and maybe I would do better by just holding a bunch of diversified funds, but I hate not deciding what to own for myself and then waiting until 4 p.m. to find out whether I should have ditched or not. – J.G., Brooklyn, N.Y.

The Fool responds: That fund was indeed a poor performer in 2008, losing 56 percent and landing in the 98th percentile for its category. But in 2007 (and 2004 and 2005), it was in the 1st percentile. Last year, it gained 76 percent and was in the 6th percentile. With funds, as with stocks, as long as you believe in their management and their potential, it’s good to be patient.

Evaluating your holdings every day is likely to lead you to trade frequently, rack up commission costs and miss out on long-term gains.