American Apparel Fires Founder

Retail

Published: December 16, 2014 4:35 pm

Last Updated: April 27, 2020 3:46 pm

In what could be — but probably is not — the last word in the running dispute between Dov Charney and the company he founded and once led, American Apparel Inc. (NYSE: APP), the company’s board announced after markets closed on Tuesday that it had terminated Charney for cause and that current interim CEO Scott Brubaker will continue in that role. At least for a few more weeks.

At the same time as the announcement of Charney’s termination, the board appointed Paula Schneider as the company’s new CEO effective January 5, 2015.

Charney was suspended as president and CEO of American Apparel on June 18 for “alleged misconduct and violations of company policy,” according to Tuesday’s announcement. The board appointed a special committee to oversee an internal investigation by FTI Consulting into the allegations against Charney. The result:

Based on this investigation, the special committee determined that it would not be appropriate for Mr. Charney to be reinstated as CEO or an officer or employee of the Company. While under suspension as CEO, Mr. Charney had been serving as a consultant to the Company. This relationship has now been terminated.

Charney is reported to have hired Patricia Glaser, an attorney who works with celebrity clients, to help him fight the firing. Now that American Apparel has officially fired Charney, the skirmishing is over and the real fight is set to begin.

American Apparel’s stock was up about 14% in after-hours trading to $0.66, after closing up nearly 5.5% at $0.58. The stock’s 52-week range is $0.46 to $1.45.

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