American Apparel opts for Performance Equity Plan

04 Jan '08

3 min read

Pro rata portions will issued for fractional years of service, and part-time employees will receive fewer shares for their time of service. It is currently anticipated that about 4,000 employees of American Apparel worldwide are eligible and will receive shares under this program.

Subject to board approval, it is expected that these shares will be granted without vesting restrictions. These shares will be subject to taxation upon grant, based on the value of the stock as of the grant date.

The company is, however, currently exploring various options for tax deferral which may be available to employees at the time of the stock grant. There can be no assurance that tax deferral will be available, nor what the stock price of American Apparel will be as of the grant date.

After this stock grant, there will be 5 million shares available for future grant to employees under the 2007 Performance Equity Plan. For those employees who have been with the company for less than one year, American Apparel's management plans to propose an additional stock program which will be subject to board approval.

Dov Charney, American Apparel's CEO, stated: “Since starting American Apparel, it has always been my dream to have the employees own a part of the company. Placing nearly $40 million of stock into the hands of our employees is an important milestone in the history of American Apparel.

This employee stock program, which I believe is unique for the apparel industry, serves as recognition for the contribution our employees have made to the company, and provides them with a direct economic stake in our future success.”

American Apparel Inc

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