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American Apparel CEO FIRED for Sexual Harassment Lawsuits
Quote:
The New York Times
By ANDREW ROSS SORKIN JUNE 23, 2014 9:06 PM
Mr. Charney, who founded American Apparel, once an upstart darling retailer, was ousted last week by the company’s board. He long lived under the shadow of speculation about inappropriate behavior with female employees and, in some cases, accusations of sexual harassment and assault that he always denied. He championed American Apparel through sexually suggestive advertising that became, in large part, the company’s brand.
Mr. Charney’s dismissal raises all sorts of thorny corporate-governance questions for investors and boards about iconic — and notorious — leaders, especially in creative fields. Corporate America is filled with examples of chief executives and founders who stepped down after proof, or even suggestions, of impropriety. Some are fired quickly when investors and boards are alerted. But others, like Mr. Charney, are allowed to linger in their roles for years.
“Of course they knew — if they didn’t know, their heads were in the sand,” said Nell Minow, a founder of the governance advisory firm GMI Ratings. “The problem is the board is so invested in their pal, their hero, that it’s very hard to get them to look him in the eye and say, ‘You have to go.’ ”
[…]
You don’t need the 20/20 vision of hindsight to have known Mr. Charney was a ticking time bomb. He was repeatedly sued by employees and former employees, and the board was well aware of the cases. The not-safe-for-work video in which he dances in the buff, and other photos, litter the Internet and can be found with a quick Google search.
In one case in California Superior Court, a potential employee, Kimbra Lo, filed a lawsuit contending that when she went for a job interview with Mr. Charney, he was “wearing only a towel” and later attacked her and “forced her to perform various sexual acts.” Mr. Charney denies it.
The situation changes when the image of the brand becomes tarnished and it starts to cost shareholders money. American Apparel’s board members felt they could finally rid themselves of the founder, people close to the company said, because the company’s performance turned for the worse. The company had lost money repeatedly for the last four years, totaling about $270 million in red ink, and same-store sales were dropping precipitously as well, about 7 percent in the most recent quarter.
Observers cheered Mr. Charney’s dismissal almost immediately.
[…]
Apparently, the final straw for the board was news that Mr. Charney had knowingly failed to stop the online publication of naked pictures of a former employee who had accused him of sexually harassing her.
Mr. Charney is, as you might imagine, trying to fight his dismissal, suing the company in hopes of getting his job back.
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For more: http://dealbook.nytimes.com/2014/06/...ype=blogs&_r=0
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