Following the company's annual meeting yesterday, the American Apparel board voted unanimously to replace Charney as chairman immediately and "notified him of its intent to terminate his employment as president and CEO for cause," according to a statement. The move is certain to mark a fight at the top of American Apparel, as Charney remains the largest individual shareholder of the company, with about 27% of American Apparel stock, according to S&P Capital IQ.
While it searches for a new CEO, the company said it has named John Luttrell, its current CFO, as interim CEO. American Apparel has also installed Allan Mayer and David Danziger as co-chairmen of the board, and has officially suspended Charney for 30 days from the company under the terms of his employment. Mayer said the action comes after the board launched an investigation earlier this year into Charney's actions when "new information came to light."
"This is not easy, but we felt the need to do what we did for the sake of the company," said Mayer, who has been a member of the American Apparel board since the company went public in 2007. "Our decision to do what we did was not the result of any problems with the company's operations. 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."American Apparel ranks as the 14th-largest supplier in the industry, and reported its promotional market revenues for last year as $99.2 million. Charney has been a member of the Counselor Power 50 since the list's inception in 2006.