The New York Post reported ousted American Apparel CEO Dov Charney is staging a comeback. Meanwhile, plans are underway to add women to the company’s board of directors. Below are a few of the candidates being considered.
American Apparel may see women on the board
By James Covert
Dov Charney may soon be back at American Apparel — but if so, things will be different.
The retailer’s controversial founder, ousted two weeks ago in a surprise coup, would not return to the board or necessarily assume any executive role, sources told The Post.
Meanwhile, insiders said a new plan under consideration calls for American Apparel to add women to the board for the first time, including possibly the chairman’s seat.
That’s a bold counterpoint to longstanding criticism that Charney had created a hostile work environment for female employees.
These dramatic changes could come in the days following the flamboyant founder’s recent move to enlarge his stake in the company to 43 percent, putting him within striking distance of a majority.
Charney, whose chairman’s title was stripped while he was suspended as chief executive at a June 18 meeting, has agreed to hand over voting rights from his equity stake to investment firm Standard General LP, which has loaned him the cash to enlarge the stake, sources said.
That deal has enabled the New York investment firm to negotiate directly with American Apparel’s board, sources said. Last week, the board implemented an anti-takeover “poison pill” defense after Charney and Standard General disclosed their stock-buying deal.
In a Wednesday letter to its investors, the fund said it has “opened a constructive dialogue” with American Apparel’s current board to find an “amicable and expeditious resolution” to the crisis.
Standard General also said it is “prepared to lend its credibility and capital resources” to avert liquidity concerns, including a $10 million loan from Lion Capital that was thrown into default by Charney’s ouster.
Under the Charney-Standard deal, the company founder has agreed to let the firm call the shots at the retailer in exchange for promising to uphold his longstanding policy of manufacturing clothes in the US and paying workers at its LA factory a living wage, sources said.
Charney, who is expected to remain the company’s largest investor, likewise has no guarantees about his future at the company, as he and Standard General await the outcome of a board investigation into alleged willful misconduct, according to sources.
“No decision has been made [about Charney’s role] until we get through the investigation,” a source close to the situation said, adding it is of “utmost importance” that the board investigation be completed.
Last month, Charney got blitzed when the board moved to fire him, alleging a pattern of behavior that materially harmed the company. Among its key allegations were that he had allowed a blogger to post naked pictures of a former employee who had sued for sex harassment in 2011.
In addition to adding women to the board, Standard General is looking to add seasoned retail pros, sources said. The reconstituted board also may include members of the current board, according to a source.
The new board will “be able to quickly identify and empower a strong management team,” Standard General said in its Wednesday letter.
“This transaction is not about the founder, nor is it an endorsement of him,” Standard General wrote to its investors. “He will serve no role if he is deemed unfit.”