American Apparel Shareholders Meeting Notes

I attended the American Apparel shareholders meeting yesterday in New York City. The formal meeting was pretty uneventful except that observing the crowd made me realize the positive energy in the room. 

When Glenn Weinman, American Apparel's General Counsel, called for Q&A, I was the only one to stand up. I had only one question in my back pocket...actually, more an observation than a question.

I commended the company for its recent operational and financial improvements. I stated that I was a big fan of the company and that I was one of the largest shareholders of the company in the USA.

But I thought I could add more value to the company by sharing with the Board one of the issues I see.

My issue with the company relates to the recent compensation of management given the stock performance since the company came public. More specifically, I was disappointed that the Board extended the maturity of the $3.25, $4.25, and $5.25 strike options by one year. The objective for the grant of the $3.25 options expiring in early 2012 was not met and the attitude should be "There is no Game 8 in the Stanley Cup Final". Just deal with it. By extending the maturity of these options, the Board is basically moving the hockey net over the puck and shouting GOAL! It should not work that way.

I told the Board that it is great how the company focuses on treating all its stakeholders very well but now it's time to give the shareholders some loving. From the Board Members body language it felt that they heard me loud and clear. If they haven't I am happy to repeat the message in a more formal manner.

Dov Charney, CEO, came to me at the end of the meeting to explain that for him it's not about the money. For him it is about retaining control of the company so that his big visions behind American Apparel (such as Made in the USA and the different social causes) are continued to be realized.  He believes that a different management would most likely change the course and discontinue the legacy of American Apparel. I totally agree with this point of view. But I think this objective could be realized without diluting the current shareholders so aggressively by letting Dov vote the proxies of current shareholders. It is up to Dov and the Board to sell this idea to all owners to stop dilution while keeping control.

I sensed from Dov that he is fully committed to giving loving to American Apparel shareholders. Let's see what happens. Show me the MONEY!

If not, I can always shout louder.  Moving the net is gloves off.

Written by Michael Bigger. Follow me on Twitter and StockTwits.