American Apparel Board Suspends Dov Charney as CEO
The Board of Directors of American Apparel yesterday voted to replace Dov Charney as chairman and notified him of its intent to terminate his employment as president and CEO for cause. It is expected that the termination will be effective following a 30-day cure period required under the terms of Charney's employment agreement.
The board suspended Charney from his positions as president and CEO, effective immediately, pending the expiration of the cure period. At the same time, the board appointed John Luttrell as interim CEO. Luttrell, who has been with American Apparel since February 2011 and currently serves as executive vice president and chief financial officer, will continue in those positions as well. Prior to joining American Apparel, Luttrell served as executive vice president and chief financial officer of Old Navy, The Wet Seal and Cost Plus.
Also effective immediately, the Board appointed Allan Mayer and David Danziger as co-chairmen to replace Charney as chairman of the board. In accordance with the terms of his employment agreement, the board intends to request Charney's resignation as a member of the Board concurrently with the effective time of his termination.
Mayer, who has been a member of the board since the company went public in 2007 and has served as its lead independent director for the past three years, said the board's decision to replace Charney grew out of an ongoing investigation into alleged misconduct.
"We take no joy in this, but the board felt it was the right thing to do," Mayer said. "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."
"The board is working with a search firm to identify candidates for the job of permanent CEO and, based on our initial discussions with the search firm, we expect the list of possible successors will be impressive," said Danziger, who has chaired the board's audit committee since 2011.