GROSSMAN BATTLES BERNARD CHAUS FOR CLAIMED UNPAID COMPENSATION
Byline: Thomas J. Ryan
NEW YORK — Andrew Grossman, who was named chief operating officer of Giorgio Armani Corp., U.S., in April, is fighting his former employer, Bernard Chaus, for unpaid compensation.
Grossman, who was dismissed as chief executive officer at Chaus last December, has started an arbitration before the American Arbitration Association in New York, alleging that Chaus breached his employment contract, according to Chaus’s just-released 10-K filing. Grossman seeks severance and noncompetition payments for the period from April 1, 1999, through Sept. 1, 2000, of more than $1 million, according to the 10-K.
Grossman, traveling in Europe, could not be reached for comment.
Chaus answered Grossman by claiming he was not entitled to any further severance or noncompetition payments since he took the post at Armani, which Chaus noted was also in the women’s apparel business, the filing said. Chaus said that even if such severance and noncompetition payments were due, they would be subject to be offset by the salary Grossman was receiving from Armani.
Each of the parties has selected an arbitrator and a third, neutral arbitrator is being chosen, the 10-K said.
Chaus said in the 10-K it “believes that its defenses are meritorious and intends to vigorously defend this action.” Chaus declined further comment.
Chaus noted in the filing that because of the termination of his employment, the firm became obligated to pay up to $1.66 million over a period of 20 months in consideration of Grossman’s agreement not to compete with Chaus for 12 months. In addition, Chaus became obligated to make bonus payments in an amount equal to 2.5 percent of net profits for fiscal years 1999 and 2000 and part of 2001. Chaus said it discontinued payments in April, when Grossman took his new position.
Chaus’s earnings in its year ended June 30 climbed to $10.9 million, or 40 cents a share, from $4.3 million, or 28 cents, a year ago. Grossman’s abrupt dismissal from Chaus was never fully explained. It came only months after the women’s apparel firm — helped by a debt restructuring as well as a rejuvenation of its Chaus brand sportswear line — reported its first annual profit since 1992.
Grossman had been with the firm as ceo since November 1994.
Some market observers said Grossman clashed with Josephine Chaus, chairwoman, co-founder and ceo of Chaus, and he became the fall guy for the failure of the licensed Nautica women’s line, which was discontinued last October.
Grossman had been lured to Chaus in 1994 with a $6.2 million signing bonus, along with stock options and a five-year contract that provided an annual salary of $1 million plus a bonus of 5 percent of earnings. He was formerly president of Jones Apparel Group.
At Armani, Grossman is responsible for the firm’s U.S. operations, focusing on areas of expansion.