True Religion Apparel Inc.'s shares jumped Monday after the clothing company disclosed that it would not be renewing its CEO's employment contract, which ends June 30.

THE SPARK: The company said in a filing with the U.S. Securities and Exchange Commission Friday that its board has decided not to extend Jeffrey Lubell's employment contract for another three years because of an ongoing strategic review.

Lubell is the chairman, CEO and creative director of True Religion.

True Religion said it wants to explore an "alternative arrangement" with Lubell.

THE BIG PICTURE: The company, known best for its high-end denim, has posted slower growth in recent years. It announced in October that it was reviewing strategic alternatives.

Profit and revenue in True Religion's fiscal fourth quarter, its latest financial period, beat market expectations, however. The company also issued a strong earnings outlook for the year.

Some investors may see the board's decision not to extend Lubell's contract as a sign that a deal is near.

Lubell has served the company's chairman and CEO since 2003, according to the company's website. He is also CEO of the company's subsidiary, Guru Denim, which he founded.

SHARE ACTION: True Religion's shares jumped 4 percent by early afternoon Monday. Its stock increased $1.08 to $27.82. The company's stock has traded between $20.22 and $30.66 in the past 52 weeks.