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Greenberg: Abercrombie Should Learn from Lulu

Tickers in this article: ANF COH LULU SBUX

SAN DIEGO (TheStreet) -- Abercrombie & Fitch's board could learn a thing or two from the board at Lululemon , starting with getting one thing straight: The board controls the CEO, not the other way around -- no matter who the CEO is, how long he or she has been in the job or even if they founded the company.

That's the moral of the story at Lululemon, where controversial founder Chip Wilson is stepping down as chairman in conjunction with the arrival of Laurent Potdevin, the president of Tom's Shoes, as CEO. The move comes as Lululemon, fresh from a CEO revolving door, attempts to revive its growth.

Compare that with Abercrombie, where longtime CEO Michael Jeffries just received a year-long extension of his contract even though the company's growth and stock have been in freefall.

It's not stock ownership. Both Jeffries and Wilson are known as strong-willed, strong-handed, micro-managing CEOs.

What's the difference? It's not stock ownership. Based on Factset, Wilson owns 8.9% of Lululemon, while Jeffries owns 1.3% of Abercrombie.

In my opinion, it's the board. Just scroll through the proxies of Lululemon and Abercrombie, and read the bios of the board members, and the answer quickly becomes obvious: Lululemon's board is simply stronger.

It's a mix of heavyweights, including the CEO of Airborne, a former CFO from Starbucks who will now become chairman and the president of Coach . They know how to run companies and have reputations at stake.

By contrast, Abercrombie's board includes a former partner from Ernst & Young's office in Abercrombie's hometown of Columbus, Ohio, the head of the Ohio State University Alumni Association and an Ohio real estate developer.

Reality: This is all about corporate governance - the quality of the board. It's not a sexy subject, and not a media eyeball grabber but in the end, for investors, in the end it's what counts.

-- Written by Herb Greenberg

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