American Apparel has laid out its contract with incoming Chief Executive Paula Schneider once she takes over the reins of the trouble retailer on Jan. 5.
Schneider, who was appointed when the company's board fired founder Dov Charney earlier this week, will be paid a base salary of $600,000, according to a Friday securities filing. She could also earn an annual incentive award, between 50% and 75% of that base, if the company reaches certain targets set by the board or its compensation committee.
The board is requiring her to present an operational plan by April 5; once she delivers a strategy, she will be entitled to receive a bonus of $100,000, the filing said.
American Apparel said Tuesday that an investigation into misconduct allegations, including inappropriate behavior with employees and misuse of company funds, led the company to determine that Charney shouldn't be reinstated as CEO or continue as an employee. He had been working as a consultant to the company after his suspension from the CEO job as the result of a preliminary investigation.
Although she will lead the company, Schneider was not given a seat on the board. American Apparel said Friday she will be able to attend all board meetings in an "non-voting observer capacity."
Schneider said she expects to get a director seat eventually.
"At this moment the board is full," she said in an interview this week. "I had many discussions on it, and the goal is to put the CEO on the board."
The firing of Charney has fueled new speculation that the company is ripe for a takeover. The ousted CEO is reportedly working with private equity firm Irving Place Capital to acquire the retailer in a deal that would value the company at $1.30 to $1.40 a share, according to Bloomberg.
Charney declined to comment. Allan Mayer, co-chairman of American Apparel, also declined to comment on takeover rumors.
Shares of the company were up 9 cents, or 8.7%, to $1.09 in midday trading Friday on Wall Street.