Dive Brief:

• Shareholders would give up too much in a settlement proposed by Abercrombie & Fitch and a pension plan, which sued the retailer over CEO Mike Jeffries's compensation, U.S. District Judge James Graham ruled Friday in Ohio.

• The lawsuit claims that Jeffries’s compensation package, including more than $140 million and huge travel expenses since 2007, is unwarranted in light of his poor leadership of the company.

• But the Aug. 29 proposed settlement doesn’t adequately address what Judge Graham called “the seriousness of the allegations.” Potential claims of shareholders outside the suit aren’t addressed and the company itself receives no compensation, Graham said.

Dive Insight:

Abercrombie & Fitch has struggled to right itself in a tough teen-apparel retail market, even compared to rivals dealing with the same obstacles, and has only recently taken steps to change its merchandising and sales strategies. CEO Mike Jeffries has been blamed for that situation for some time, and the company has taken steps to rein in his compensation and his duties. This decision by a federal court shows that the company may have more to do in addressing the consequences of Jeffries’ performance in recent years.