Dov Charney has always been a headline grabbing personality—we're just in his latest chapter. Charney is notorious for sexual harassment scandals, which both directly and indirectly set the company he founded (American Apparel) on the precipice of financial ruin. But it's hard not to feel a little sad when you realize that—scandals aside—his loyalties have always lied with American Apparel; no matter how much negative press he brought to its doorstep. But when Charney was fired in June 2014 (and then again at the end of the same year), there was a disconnect. He didn't resign due to the drama surrounding his persona, rather, he was forced out by leadership within the company who were looking to make a change. We've seen fragments of the story behind his exit through back-and-forth legal battles between Charney and American Apparel, but thanks to Business Insider, we finally know the real reasons behind Charney's untimely exit.
Pulling accounts from American Apparel's board, employees, shareholders, and those close to Charney, the chain of events truly begins in early 2014, when the CFO made up plans to oust Charney from the board—leaving him without a job and influence, even as the American Apparel's largest shareholder.
For four months before his showdown in June, Charney was under a secret investigation; the board members building a collection of information that would archive his "sexual liaisons" and other misdeeds within American Apparel. For the record, Charney notes that, while he's been sued, he hasn't been criminally charged or found personally liable for any of the numerous claims against him.
For Charney, he feels as though his termination (and the dossier of information collected to use against him) was a calculated coup on behalf of a biased board of directors, aiming to oust him at the earliest possible moment for personal gain.
After the board served Charney with a termination letter in June 2014, he (along with friend and creative director Iris Alonzo) decided to fight back. According to secondhand sources, Charney explained to Alonzo, "They're trying to fire me, it's completely illegal, they don't know what they're doing, they have no idea how the company functions."
With Alonzo on his side, along with a majority of American Apparel's management team, Charney would spend the next 11 hours talking with the board of directors; who instead were instructing security to remove Charney's access to company email, phone, and HQ.
But the flaw in the board's plan was a simple one: American Apparel was, and is, the product of Charney's work. As Alonzo reportedly said to the board, "You’d need five people to replace Dov. You’re ripping the heart out of the company — you’re going to destroy the company. You don’t know this business."
While Alonzo and others would go on to insist Charney's centrality to the company, it was all too late. With the board meeting in secret the night before Charney was told of his termination, Charney's fate was already sealed before he walked into the boardroom. The meeting with Charney and the board reportedly had only one purpose: force Charney into a smaller role with American Apparel, or finally fire him.
"Charney could either accept a $4.5 million severance package and the new title of “creative director,” for which he would also be paid $500 per hour. It would not look as if he had been fired, merely moved into a new position with the company.
The price of that package was that he had to sign over the voting rights to his 47 million shares, and resign as CEO. Or, the board would remove him."
The story that follows is ultimately a back-and-forth between Charney and American Apparel's board of directors, who—among other things—would leak a nude video of Charney; install a new CEO; come incredibly close to leaving the company bankrupt; reinstall Charney, and then fire him again. For all of the drama that Charney had been stirring up to this point in June 2014, his failed La Mirada distribution center—founded in 2013— would quietly become a financial failure that didn't just hurt American Apparel's bottom line, but would help weaken Charney's financial power within the company, and made it easier for the board to fire him in 2014.
To be honest, the saga of conspiracy, lies, and misdirection plays more like a soap opera than a corporate reshuffle. For what it's worth, the piece also points out that, either as a direct cause or simple coincidence, without Charney, American Apparel is on its deathbed.
For more details on Charney's removal from American Apparel, along with the personalities on both sides of the fence, head over to Business Insider to read the full story.