The Road to Dov Charney’s Ouster at American Apparel

The plan to fire American Apparel’s founder and chief executive took shape in a private dining room at the Redeye Grill in Manhattan.

Comments: 54

  1. "Johannes Minho Roth, chief executive of FiveT Capital, ... , said that he thought Mr. Charney had done a good job of improving the company’s performance in recent months, cutting costs and managing distribution problems."

    Isn't "cutting costs and managing distribution problems" something any competent executive could do?

  2. Yes it is, butg choking out a store manager for perceived subpar performance and dancing buck naked while being video taped by female associates is not.

    Sadly, lying, cheating and general bad behavior will be tolerated as long as you make your numbers. Miss your numbers....look out below.

  3. What if it is? That's the way business works anyway. But a 'competent executive' is not necessarily one who can tell people what to do, consistently, lay people off, and distribution problems can take a lot of bullying as well, which is what better-than competent executives do effectively and with a smile on their face.

  4. As long as he made money, the board didn't care what he did to employees.

  5. I thought it was ironic and hilarious that this article on Charney's ouster was accompanied on your website by ads for men's underware.

  6. I'm seeing ads for Pace University, a car company, American Express, and Lilly Pullitzer clothing. I know for sure that the last one in that list is based on my recent internet browsing--it's possible that your ads were similarly targeted.

  7. Actually Lizbeth, I also had the "men's underware" ad on my computer, and, as an old crock, I only use it to read the Times and check my email. I never "browse" and wouldn't know how to if I wanted.

    Snarky isn't nice, Lizbeth.

  8. Great Merchants, are not always great leaders.
    American Apparel needs protection as well.
    It is the company, which has been injured, time for a healthy runway.
    The dream lives on the dreamer has to wake up and smell the roses.
    Good Luck Mr. Carney.

  9. As a friend of mine said, as long as you make your number, you can kill the Pope and get away with it. Seems like once the numbers started to sag, Mr Charney's behavior become a problem, but not until then. And that is the problem, it's all about the number, not about how you get there and what you do along the way. Sad comment on American business......

  10. Well, does business have any other purpose than making money? Would people run companies, and go to work every day, just for fun?

  11. That piqued my attention as well. As much as the focus is on his bad management style and creation of a toxic workplace, no worries until the money runs out.
    Now, I think the brand will have work to do if it wants to survive once Dov is gone. Its shock advertising drives its image - and once you remove the creative director driving that shock, what's left to hang your hat on? What they need is an identity beyond soft-core porn.

  12. Well, some people go to work to make money decently. Maybe I'm just lucky to know a lot of these type people.

    The article mentions that AA had trouble attracting the right talent to the company thanks to Mr. Charney's eccentricities. Perhaps a heavier dose of decency and a corresponding reduction in Charney's indecency might have also been good for the bottom line?

  13. I find the beginning of the article fascinating:
    "In a dimly lit private dining room at the Redeye Grill in Manhattan, four board members of American Apparel and their lawyer plotted out their next 24 hours over steaks and red wine"

    Indeed. I have no horse really in this race but why over steaks and wine?? Because they weren't paying for it! I would suspect they charged the dinner to the company. Hah! Nice governance there! Put of with shenanigans but then when the company isn't doing well, suddenly there is an issue. Didn't their lawyer have a conference room? Shouldn't this discussion be held in a confidential setting? Yeesh. Business at work as usual.

  14. Spot on! The whole mess is depressing - especially how long it took to even consider getting this creep out of the company.

  15. These stores are empty. Board amy also be trying to delay the end of this chain, while collecting salaries and perks. Hardly ever see anyone in their retail stores. Might as well close up.

  16. Our small nonprofit had done business with American Apparel up until a couple years ago. We liked the American-made label, not because of any sense of national pride, but because we felt the t-shirts we ordered had a better chance of being made under non-sweatshop conditions. However, as we continued to see the racy ads used by AA to market its products, we began to feel this wasn't a company we wanted to be associated with, and took our business elsewhere. We weren't aware of the CEO's behavior at the time, but in retrospect, it's not surprising--when women are demeaned in your ad space, why won't they be in other more intimate settings?

  17. I called the PR department of this store at its headquarters in LA, for its life sized nude mannequins posed in a suggestive manner in their windows on Brattle Street in Cambridge, MA. I pointed out that Brattle Street is one of the most beautiful streets in the USA, rich in historical interest (the Longfellow mansion owned by the National Park Service and Radcliffe Yard are a few steps away). I said that AA should feel honored to have storefront in such a precious place.Of course they made clear to me that I was a batty old lady, but a few days later the mannequins had panties on, at least.

  18. I find it very fascinating that John Galliano, the creative force and genius behind Dior was immediately terminated for a single episode of anti-Semetic remarks made while drunk. Dior was very profitable and Galliano was repentant.

    On the other hand Dov Charney, a serial predator with innumerable and well publicized lurid complaints, many bordering on criminality (sexual harrassment, anti-gay hate crimes) was tolerated for so long. Is there a double standard?

  19. John Galliano was an employee. A closer equivalent would be Dior firing Christian Dior himself.

  20. It was Charney's bat and ball, hard to get it out of his hands. Galliano was only an employee.

  21. One was on camera at a party (or something), the other well-insulated within a company, his legal team and a mountain of cash. Charney's reputation was well established and jibed with the racy images used in his company's advertising.

  22. Let me get this right. In the past 7 years the company stock price has plummeted from a high of $15 down to well under $1, the CEO had been plagued with numerous suits, and the management ranks had been thinned by Mr. Charney's behavior. But it still took until this year to get the guy fired? And he was still offered a multi-year, multi-million dollar contract to placate him? No, we have no problem with corporate governance here in the US, do we?

  23. Most CEO's don't own 27% of the company. It was even tougher when he owned 45% of the company.

  24. Sick guy. No one should have to work for someone like him.

  25. American Apparel is no aberration. Effective governance of public companies is just as broken as public sector leadership. It seems to me that we are getting the leaders we deserve as long as we fail to hold anyone fully accountable and remain unwilling to step in, put ourselves (as shareholders, employees, customers, etc.) on the line and say "enough is enough"? I recognize that's easier said than done because so much of this has become so incestuous and we all have to make a living. But this business as usual attitude is decimating not just many of the places where we work, shop, etc. but our culture and fabric as a country.

  26. @ Blue the big difference between private and public sector? We in the private are held accountable for our actions AND CAN BE FIRED....Charney is case in point, whereas people in public sector? Well good luck with that. Ever hear of someone being fired from a union? Welll except those in PATCO. Not that simple. Too bad his idea was a good one, too much of our "stuff" is made elsewhere specifically China.

  27. All that matters in most business is money.

  28. For years, have been reading these stories about Charney's predatory behavior in the workplace and that's why I've never shopped at American Apparel. The board may not have wanted to drop him, but as a consumer, I had no such qualms.

  29. If you are exceedingly distasteful in life but make money, you are described as being "a mercurial genius" or "a philanderer with a knack for turning a profit."

    If you drive your stock into the dirt and lose more than 100 mil, you're fired.

  30. So the sociopathic behavior was not enough, in fact, to oust a corporate grandee. But they reserve the right to use it as an excuse when the financials are bad. I think that gives us a good insight into the moral standards of many companies today.

  31. The use of the term "many" is simply not supported.

  32. Didn't we all know that the company was run by a sick person just by the design of the clothing and the ads around town?

  33. How can you complain about this guy? Truthfully, I never heard about him until I read the article this morning. But look who Florida has for a governor whose company cheated Medicare out of a billion dollars. It was known by all those voters!

  34. The clothes themselves are pretty nice.

  35. So it boils down to profit trumping morality. Take away the profit, and suddenly the board becomes a paragon of virtue. Excuse me while I vomit.

  36. You've forgotten that old Swedish adage, "Money, money, money, it's a rich man's World."

  37. Many women have boycotted American Apparel for years due to Mr. Charney's flamboyant misogyny. The board might consider filling half its board chairs with women. I doubt Mr. Charney's exploits would have persisted this long if there had more women on American Apparel's board of directors.

  38. While Charney held 45 percent (later 27 percent) of shares? Unlikely.

  39. Dov Charney reminds me of the items I've read about the Abercrombie & Fitch CEO, Mike Jeffries. Both seem to be trapped in perpetual adolescence, with a ridiculous middle school mentality of how the world works.

  40. I bought one item at American Apparel five years ago because I knew the company manufactured goods stateside. But then I read about Dov Charney and never visited the store again. The AA Board is years late and a dollar short. Dov's lawsuit will further expose Dov's harassment of women. It will also expose the ineptitude of the board's latent response to Dov. And while we'e on this topic, why don't corporate boards address the horrid working conditions in so many industries around the world. Capitalism, yes, capitalism is not a rising tide that lifts all boats unless everyone, from CEOs on down, commit to buying only products that pay a living wage. The Times just reported on the exploitation of human beings by the fishing industry. I will no longer eat fish farmed or harvested from countries/ships in the countries listed in the Times' article. I already refrain from buying footwear, clothing and accessories from chains like H&M, Gap, Nike, etc., because they don't police the third world countries like they claim to do.

  41. Mr. Charney rented an apartment next door to mine years ago for photo shoots. He always creeped me out. I sincerely hope he did not set up a secret camera into my apartment! Then again, I am neither young nor attractive, so I am likely safe!

  42. Don't be naive, the bottom line in anything is profit. We are a capitalist society after all, grow up and if you don't know this by now your in for some surprises in your life.

  43. CEO behavior and corporate behavior does matter. For at least a few years, there's been a stigma to American Apparel because of Mr. Carney's behavior and the awful ads using very young, non-professional models in very sexualized contexts. It's the same for Lululemon and A&F. I don't need a client or manager or friend thinking badly of me if they run into me at the gym wearing those brands - way too much baggage for a T-shirt or pair of leggings (young professionals working in major urban areas might note, there's a good chance at least some people supervising you do notice this). On the other hand, AA did the right thing by making things in non-sweatshop conditions, which I would gladly pay extra for - for a lot of things you buy, you just don't know. I've bought a lot lately from Icebreaker, which makes great running and hiking gear and seems to have good policies in place for workers and the environment, would love to see more companies putting this front and center in their corporate policy.

  44. Why have I not seen Gloria Allred sue any female CEOs of nonprofits for repeatedly sleeping with married male employees? And yes, there are plenty, including some well-known nonprofits in Washington, DC. Is it because there is a double-standard? Power corrupts and absolute power corrupts absolutely, regardless of gender.

  45. Not a fan of Gloria Allred, but an attorney doesn't just sue on behalf of random people. She can only represent people who ask her to. Maybe men you are talking about asked her to represent them and she said no, or maybe she said yes and you're just not aware of her efforts on their behalf, or maybe they never asked.

  46. Sexual harassment in the garment industry is ubiquitous. American apparel isn't"alternative." it is a regressive ad ploy wearing a burqa with a scarlet letter reserved for the owner, and stock holders.
    Where are the charges?

  47. Had Dov been a woman he would have been ousted years ago.

  48. He committed the one unforgivable sin in America business--losing money.

  49. Too much bad behavior by CEOs is known to boards but never gets discussed or is covered-over by consultants and lawyers reports requested by the Board. (Bet you there are many at American Apparel. Consulting Relationship Agreements-CROs-are another good way CEOs and Boards paper-over questionable behavior.) This happens at private companies, colleges, hospitals, and nonprofits. Only when a situation becomes horrific or unmanagable do Boards take disciplinary action. Perhaps they are slow to act because they are largely immunized to poor governance by Directors & Officers insurance. Time for codes of conduct, more transparency, outside directors, and higher insurance premiums.

  50. Boards don't act because they are fatally compromised in 100 different ways. They receive immense compensation for very little work, and they don't want to give that up by bucking the management which was responsible for their appointment in the first place.

  51. Where did you get the information that employees had to sign agreements giving up all rights to sue the company? There are some employee rights that cannot be waived. And in some circumstances, enforcing such an agreement might run afoul of laws against witness tampering and obstruction of justice.

  52. It is amazing that a company founded on principles of treating production workers fairly would allow those working in proximity to the visionary founder to be treated so contemptuously and abusively.

  53. Charney is the classic case of the visionary executive who was very good at his business — in his case, designing, manufacturing and retailing clothes — and very bad at business.

    Companies like this that do well are ones like Calvin Klein, Valentino, Donna Karan and Yves St. Laurent, where co-equals manage the creative and business sides and each side sticks to its knitting.

  54. I had no idea who Dov Charney was before this brouhaha, so I went a-Googlin', and now I wish I could power wash my brain.

    Sometimes I am happy to live well outside the mainstream.

    How does a man like this, I wondered, get away with such abusive behavior for so long, in a supposedly enlightened, modern workplace? In stumbling through the morass of search hits, I found a comparison between Charney and the infamous -- and remarkably similar -- Terry Richardson. Clicking through to a scathing piece about the latter (down the rabbit hole we go), I read this observation by an ex-model-cum-online-magazine-writer, on why young women and girls in the fashion industry might be loathe to challenge or report abusive behavior by the guy who holds the power: "Pointing out the wrongfulness of his behavior risks hurting you more than it will him." Bingo. That is how Dov Carney, and men like him, get away with what they do.