American Apparel names a new board without controversial founder Dov Charney

File: Dov Charney. Keith Bedford/Bloomberg

The board of American Apparel, which suspended its controversial CEO Dov Charney on June 18, is about to look very different.

In a regulatory filing Wednesday, the company announced a new slate of directors for its board that will take effect Aug. 2. The four new directors, in combination with two independent co-chairmen who will remain on the board, will be faced with overseeing a company that has had years of losses and been engulfed recently in an unusually public boardroom battle. The new members include a turnaround expert, the CEO of RadioShack, and a partner with the New York investment firm Standard General, which brokered a deal with the company to improve its financial standing.

Notably, the list also includes a woman, a first for a company that has faced allegations of sexual harassment by Charney over the years.

The new board slate is the result of a deal between American Apparel and Standard General announced July 9. The agreement included a $25 million lifeline, part of which American Apparel could use to repay a $10 million loan, as well as a reconstitution of the company's board. As part of the deal, five of the board's seven members, including Charney, agreed to resign. Standard General would get to name three new board members, two would be named jointly by the company and the investment firm, and the two independent co-chairmen would remain.

The new directors named by Standard General are David Glazek, a partner at the firm who has been heavily involved in the American Apparel deal, and Thomas Sullivan, a director of Media General who was noted in the filing for his experience with financial restructuring and working with private equity firms. Standard General retains the right to add one more board member.

The two directors named jointly by the company and the investment firm include Colleen Brown, a former CEO of Fisher Communications and director of the industrial staffing firm TrueBlue, and Joseph Magnacca, who has been CEO of RadioShack since early last year. Prior to joining the struggling electronics retailer, he held executive jobs at the drug store chains Walgreens and Duane Reade. In the filing, Brown is highlighted for her management and operations experience as well as her service on the boards of public companies. She also adds some diversity to the top brass of a company that has had no female directors and that currently has no women among its senior-most executives.

One immediate task faced by two of the new board members, in conjunction with one of the co-chairmen, will be to review the forthcoming results of an investigation into alleged conduct by Charney and decide the fate of the controversial founder, who has been trailed by accusations of sexual harassment and questions about his provocative behavior for years.

The former CEO, who remains a consultant at the company as part of the deal with Standard General but has no managerial role, was suspended by the prior board on June 18 with an intent to fire him for cause, following a 30-day waiting period, over allegations of personal and professional misconduct. Through his lawyer, Charney has called the charges baseless. The waiting period has been supplanted by the results of the current investigation.

Media Read also:

When company founders fight back

How American Apparel decided to oust its CEO

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Jena McGregor writes a daily column analyzing leadership in the news for the Washington Post’s On Leadership section.



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Jena McGregor · July 23, 2014

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