"After Firing CEO Over Sexual Harassment Charges, American Apparel Adds One Woman To Its Board"
CREDIT: AP Photo/Keith Srakocic
In June, American Apparel ousted CEO Dov Charney over “an ongoing investigation into alleged misconduct” after repeated sexual harassment and sexual assault allegations against him. As part of a shake-up of its board in the wake of that decision, the company announced on Friday it had added its first female board member.
Colleen Brown, a media executive who is currently managing director of Newport Board Group, will join the board along with three other new directors. All directors but the two co-chairmen from the previous board have resigned. The change up is part of an agreement with a hedge fund that has injected the company with emergency funds and loans. The fund has the right to name one more board member.
As Bloomberg News reported, adding Brown “add[s] a female perspective to a company known for its racy advertising and sexually charged culture.” But she isn’t likely to be able to change much on her own. While multiple studies have found that gender diversity on boards leads to better company performance, it takes at least three women to really make a difference. One woman on her own may not be able to change the corporate culture already in place.
And while Brown’s addition represents progress, it may be limited, given the company’s struggles. Beyond the sexual harassment and assault charges against its former CEO, it’s lost $270 million since 2010. The company has had to raise capital several times, as well as get amendments to some of its credit agreements to avoid default. The Securities and Exchange Commission has also questioned the company’s disclosure practices.
It may be no coincidence that the company has added the first woman to its board in such a time of turmoil. Multiple studies have shown that women and people of color are more likely to be brought into the top ranks when times are bad, both in board positions and CEO roles. This is the phenomenon known as the “glass cliff,” and it can also be followed by the “savior effect”: if a woman or a person of color brought in during bad times can’t engineer a turnaround, they’re likely to be replaced by a white man.