Dov Charney rakes it in

The founder of L.A.'s American Apparel - he's the one who likes to take R-rated pictures of his models - just got a meatier deal from the small company that's buying his business. Under terms of an amended agreement, Charney picks up another 5 million shares of Endeavor Acquisition (that gives him a 55 percent stake in the newly merged company). He also entered into a three-year employment agreement that provides a base salary of $750,000, plus a bonus of up to 150 percent of base pay based on yearly performance (and a potential long-term bonus to boot). The original deal had Charney getting $1 in base salary and no added compensation. It's hard to know the story behind this story, but AA says its same-store sales in the third quarter rose 27 percent from a year earlier - a nifty improvement from what seemed to be a slowdown in 2006. Here's todays's release and here's a little backstory from a NYT piece when the deal first came down:

Mr. Charney has gained a reputation as the Hugh Hefner of retailing, decorating his stores with covers of Penthouse magazine and admitting in interviews to sleeping with employees. In lawsuits filed in 2005, several employees charged him with creating a work environment in which women did not feel safe. They claimed in the lawsuits, for example, that Mr. Charney conducted job interviews in his underwear and gave a vibrator to at least one female worker. Mr. Charney has denied the charges, and judges have dismissed some of the lawsuits against him. In the interview, Mr. Charney said that the media had “exploited American Apparel on certain issues,” adding, “I would never do an interview in my underwear.” Speaking generally, Mr. Charney commented, “I think that like everyone, I have made my mistakes.” But he continued, “We have run this company well, having the fastest retail rollout in American history. I am proud of my team.”

Apparently, employees must now sign a document that says: “American Apparel is in the business of designing and manufacturing sexually charged T-shirts and intimate apparel, and uses sexually charged visual and oral communications in its marketing and sales activity.”

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Mark Lacter
Mark Lacter created the LA Biz Observed blog in 2006. He posted until the day before his death on Nov. 13, 2013.
Mark Lacter, business writer and editor was 59
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