Published On: Sun, Aug 24th, 2014

American Apparel’s Old Boy Corporate Culture Challenged with 2 Female Board Members

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American Apparel is known for its risque ads that often offend or please, are edgy, off-putting to some, but certainly attract attention, and perhaps, a particular kind of daring consumer. These ads that typify the brand might not change, but what was determined as necessary is a makeover of the corporate culture, which was typified by sexist antics of former CEO Dov Charney, who was said to have interviewed prospective female employees in his underwear and finally behaved so badly that Standard General, which covered what would have been a ruinous debt for $10 million in exchange for some say about the board, called for Charney’s ouster.

Because of “key man” (and when they say “man” they must mean “man” as in “male”) provisions relating to the loans that require Charney to stay in some capacity, he can’t be ousted entirely. Standard General demanded a shake-up of the board, which now, for the first time, includes two women: Laura Lee,  former East Coast head of partnerships for Google, and Colleen Brown, who served as executive for several media companies. Together the women aim to make the company more responsible and effective.

Institutional Shareholder Services gives American Apparel a 10 out of 10 rating for governance risk. That means those who take over have their work cut out for them, or looking on the bright side, there is nowhere to go but up. The internal problems within the company have also led to poor performance, with a 6% drop in same store sales. Research from Simon Fraser University in Vancouver, British Columbia shows that going from no women on a board to having at least one can improve corporate governance ratings dramatically.

Amazingly, even in 2014, 90% of Fortune 500 companies have no women on their boards, while in Canada, only 40% of boards lack women entirely. American Apparel is not the only major company that has a long way to go, baby.

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