Cherokee Inc. on Monday said that Robert Margolis, its executive chairman and largest shareholder, had resigned as of last Friday, and that another director was elected to replace him.
The Van Nuys apparel and home decor brand management company, whose lines include Cherokee, Sideout and Carole Little, said that the non-executive chairman position will be filled by Jess Ravich, 53. He is managing director of international investment banking firm Houlihan Lokey and has been a Cherokee director since 1995.
Margolis, who was 62 as of the company’s last proxy, was co-founder of the company's apparel division in 1981. He has held various roles with the company, including chief executive, a job he gave up in August.
“Cherokee owes a tremendous debt of gratitude to Robert Margolis for his invaluable contributions over the years,” Ravich said in a statement. “It was Bobby’s vision in 1995 that transformed Cherokee from a moderate apparel company to the global brand management company it is today.”
As of the most recent regulatory filing, Margolis controlled 743,000 shares, or 8.35 percent of the company. The board approved a separation agreement with Margolis under which his fiscal 2012 compensation will be accelerated, and the company will repurchase 400,000 of his Cherokee shares at $18.15 per share, its closing price on Friday.
In addition, Ravich and Chief Executive Henry Stupp, will purchase 50,000 and 10,000 common shares, respectively, directly from Margolis on the same terms as the company.
The company said it arranged a $10 million term loan facility with U.S. Bank to finance the transactions with Margolis. Shares purchased by the company will reduce the number of shares outstanding, and be accretive to earnings per-share, it said.
The board also approved a 20 cents per share quarterly dividend to shareholders of record on March 1. The company’s last quarterly dividend was 38 cents a share. The board said it decided to channel the money saved to support existing brands, as well as any new acquisitions, so it can better execute its growth strategy.
“This transition is an important milestone for Cherokee,” Stupp said in a statement. “Having the support of the board in order to pursue prudent acquisitions and growth strategies to more fully capitalize on our global platform is gratifying.”
Shares closed down $2.12, or 11.7 percent, to $16.03 on the Nasdaq.
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