Pay for Failure at American Apparel: $1.3M for Only 7 Months' Work
The difference between American Apparel (APP) CEO Dov Charney and his business development officer, Marty Staff (pictured), who just left the company after only seven months, is that Staff is being rewarded for failing whereas Charney has received few rewards as he attempts to turn his disaster-area of a company around. Staff walked out of the non-profitable company with $1.25 million in cash and a free computer. Charney's salary is about $764,000.
In other words, Staff has somehow managed to make Charney look good.
Staff used Women's Wear Daily to make it look like he was driven out of the company by Charney's micromanaging:
"Dov is a one-man band, and I don't think I realized how singular that vision is," said Staff of Charney, who is founder, chairman and chief executive officer of American Apparel. "When I joined, I don't think I realized how actively Dov manages every part of the company -- from design to IT to marketing to finance. All roads lead through Dov. No judgment on that, but I think I was used to something more collaborative."This is disingenuous: Everyone knows that Charney is an inveterate meddler. Staff must have been the only person in the fashion business who did not know that Charney cant help himself.
In bailing after just half a year on the job -- and still no profits on the books -- Staff triggered a pay-for-failure agreement that looks like this:
- 7 months' salary: $350,000
- Cash severance: $300,000
- Another payment of $600,000 in lieu of a restricted stock award.
- Continued medical, dental and insurance benefits up to six months.
- Any unreimbursed business expenses
- A free computer.
- Total: $1.25 million, plus perks.
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