Employment Loss For CEO Of American Apparel

The board voted for Charney to be suspended with immediate effect and informed him of his employment termination. Board member Allan Mayer announced: “We take no joy in this, but the board felt it was the right thing to do. Dov Charney created American Apparel, but the Company has grown much larger than any one individual and we are confident that its greatest days are still ahead.”

Ranging from a variety of misdemeanours, 45-year-old, Carney misused company funds and failed to stop the scandal of a previous employee who had accused him of sexual harassment. A source said that the unspecified allegations have resulted to the company’s independent directors hiring law firm, Jones Day, in March to lead the investigation.

Charney’s exit also follows the result of the company’s struggle to hit sale targets. A source has revealed that Charney was using company funds to book flights for his parents and sometimes provided business apartments to friends and also stayed the night himself. However, according to company filing in April, Charney’s employment contract permits him to “vacation benefits and reimbursement of reasonable and necessary business expenses.”

The filing also showed that in 2013, his father, Morris Charney, who is on the company pay roll, received $238,000 in architectural consulting and director fees. And that of his mother who is not an employee but contributes to retail and design to the company.

American Apparel has been struggling with weak sales and heavy debt with only a market value of $120 million. Whilst the industry praised Charney for his creativity, it has been evident that the company has been careless with financial controls and has been noted for cause for concern of its management team.

By Natasha Owoaje

Image via butterboom.com