While American Apparel (APP) was distracting the blogosphere with a new set of ads featuring total nudity, management was taking ownership of more than 9.1 percent of the company's stock with rather less fanfare. The move still leaves CEO Dov Charney in control of the company -- he already owned 53 percent of the company.
The new ads are hand drawn and reminiscent of the hairy illustrations from The Joy of Sex, the 1970s coffee table hit, which is why they're not particularly shocking -- but they do make for a lot of talk.
You don't need to be a genius to figure out that APP is at its lowest ebb right now. The company has flirted with bankruptcy and the stock trades at just over $1 -- down from a high of $15 in 2008. So AA is a very, very cheap buy right now. Assuming AA does not go bankrupt -- and it just got new financing, so why would it? -- it can only go up. The company sold $1.675 million in shares to Charney's managers* and granted free of charge 6.5 million restricted shares "to executive and non-executive management employees and certain consultants to the Company." AA also paid the $3.6 million tax bill on those stock grants.
- UPDATE: In March 2011, Charney told BNET that he personally did not receive any stock in this transaction and that the stock went only to his managers and employees. See correction below.
The company said the stock grants were made as part of a performance plan. But given that the company is losing revenues, cash and profits, it's difficult to see what they were rewarded for.