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Just four days after the news broke that Dov Charney was out at American Apparel, Buzzfeed uncovered Charney's official letter of termination. The letter was leaked onto social site Whisper by an anonymous source who maintains that it was financial reasons (rather than all of Charney's connections to sexual harassment and assault) that caused the board to fire Charney.
As the termination letter details, the board's reasons fall somewhere between the company's financial liability and Charney's disgraceful personal conduct. The leaked statements provided a laundry list of Charney's shady dealings that pushed the board to the tipping point, most of which were related to sexual harassment that then caused endless financial woes for the company.
The allegations go something like this:
1. Breach of Fiduciary Duty: "You have violated the fiduciary obligations owed to the Company in several material ways. For example, you were aware of, but took no steps to prevent an employee under your direct supervision and control from creating and maintaining false, defamatory and impersonating blog posts about former American Apparel employees."
"We also recently learned that you presented significant severance packages to numerous former employees (including packages to REDACTED) to ensure that your misconduct vis-a-vis these employees would not subject you to personal liability. None of these severance packages were discussed with or approved by the Board of Directors."
2. Violation of Company Policy: "As is evident from a number of recent court rulings and arbitrator awards and decisions, you repeatedly engaged in conduct that violated the Company's sexual harassment and anti-discrimination policy. [...] In the recent past, you refused to participate in mandatory sexual harassment training and undermined the Company's policies by interrupting employee sexual harassment training mandated under California law."
"You also violated the Code of Ethics by failing to stop your subordinate from posting false and defamatory blogs as discussed above. Furthermore, on several occasions you have made derogatory and disparaging remarks directed at persons of certain ethnicities or related to their gender, sexual orientation or religious persuasions that are discriminatory and offensive and are not in accordance with Company policies."
3. Misuse of Corporate Assets: "You have used corporate assets in an inappropriate manner and for personal, non-business reasons without approval of the Board. For example, you continue to seek reimbursement by the Company for personal services such as legal consultation and certain property rentals and related expenses for various employees/consultants. [...] You also have engaged in self dealing by purchasing travel for family members with Company funds."
"In terms of finances, your conduct has required the Company to incur significant and unwarranted expenses, including expenses associated with litigation and defense costs, significant settlement payments, substantial severance packages that were granted to employees, and unwarranted business expenses that you incurred for personal reasons. The Company's employment practices liability insurance retention has grown to $1 million from $350,000, causing an unacceptable level of risk for the Company, and the premiums for this insurance are well outside of industry standards."
On Friday, the WSJ reported that Charney fought the charges against him in a 10-hour long board meeting on Wednesday in an attempt to change the board's mind before the firing went public. The leaked letter stated that Charney is currently on suspension and will be officially fired on July 19 unless he is able to "fully effect a cure of [his] misconduct."
· Exclusive: Read Ousted American Apparel CEO Dov Charney's Termination Letter [Buzzfeed]
· American Apparel CEO Dov Charney Fired Over 'Misconduct' [Racked]
· American Apparel Sold So Many Basics Dov Charney Got a Raise [Racked]