A new round of creative director musical chairs is putting elements of employment law back in the spotlight – albeit the latest shakeup of top industry talent is playing out amid an evolution in how much control companies can legally exert over individuals in the immediate wake of their employment. The bulk of the current creative director discourse comes in the form of confirmed departures – such as Virginie Viard’s newly-announced plan to vacate the top creative job at Chanel – and rumored splits, with the most scintillating report on this front being the potential that Hedi Slimane leaves Celine (for Chanel?) if current contract negotiations with the LVMH-owned brand do not go his way.
All the while, there are several big name “free” agents in the mix, as well, including former Valentino creative head Pierpaolo Piccioli, Sarah Burton (formerly of Alexander McQueen), etc.
As for how “free” any of these individuals actually are depends, of course, on the terms of their employment agreements with their most recent employers, which likely include strict limits when it comes to working for similarly-situated brands. In fact, it is common to see non-compete provisions inserted into creative directors’ (and other design and non-design-focused individuals’) contracts as part of an enduring power-play in the uber-competitive luxury market that is aimed at keeping key talents in their roles and maybe more importantly, preventing them from jumping ship to a competing company.
Yet, this latest round of director shakeups is potentially unique in light of a bigger picture, in which the enforceability of non-compete agreements is being considered by regulators. Such contractual limitations are on their way out in the U.S., for example, thanks to the Federal Trade Commission. The government agency voted in April to issue a final rule to ban most new non-compete agreements, including those of senior executives, which the FTC sweepingly defines as individuals who earn more than $151,164 per year and that occupy a “policy-making position.”
Meanwhile, in the United Kingdom, the government is looking to limit the applicability of non-competes, announcing last year that it would limit the length of post-employment non-compete clauses to just three months.
But despite falling out of favor in the U.S. and the UK (to some extent), non-competes are alive and well – and continue to be a high stakes matter – in Europe. In France, for instance, where no small number of luxury’s biggest names are headquartered, “Non-compete clauses remain valid and case law on enforceability is currently stable,” Herbert Smith Freehills LLP stated in a note, adding that it is “common” for employers to include non-competes clause in the employment contracts of key employees.
Meanwhile, in Italy, another hub for luxury brands and groups, non-compete clauses with a duration of as long as five years (for executives) remain in effect, assuming that the terms of these agreements are narrowly defined, subject to consideration, etc.
As for how the state of non-competes is playing out in the “real” world, one recent example comes by way of former Gucci creative director Alessandro Michele, who reportedly had to wait out a seemingly standard non-compete with the Kering-owned brand, where he was creative director until November 2022, before taking the same job at Valentino. Industry reports put a March 2024 end date on his non-compete. (For some perspective, industry lawyer/deal-maker Betsy Pearce previously stated that the duration of non-competes has also increased “substantially” in recent years, up from an older norm of six months between gigs to nine to 12 months or more.)
Looking beyond the technicalities behind Michele’s move from Gucci and Valentino (a transition that may have been smoothed to some extent by the friendly terms between Gucci-owner Kering and Valentino’s parent Mayhoola in light of Kering’s ownership of a 30 percent stake in Valentino), Hedi Slimane will undoubtedly be a more complicated case if history – and his unique and all-encompassing approach to the creative director role – are any indication.
One need not look further than Slimane’s ugly legal battle with Kering to see what a worst-case-scenario looks like. You may recall that Slimane sued Kering back in 2016 (just months after he stepped out of the role of creative director of Saint Laurent), alleging that the French luxury goods group failed to make good on a non-compete clause in his contract with Saint Laurent when it opted not to enforce the clause at the end of his contract. Slimane ended up with a multi-million euro pay day as a result of the legal clash.
What will also be interesting (and potentially complicated) when it comes to a potential split off of Slimane and Celine following his six-year contract with the brand, which reportedly ended early this year, is the impact of the outsized role that the celebrated creative routinely takes on. It is worth noting that at Celine (and at YSL before that), Slimane’s reach broadly includes everything from overseeing product design to directing – and claiming rights in – Celine’s copyright-protected ad campaigns. As a result, his compensation situation is believed to go beyond a straightforward paycheck and bonus to include royalties that he reportedly pockets in connection with the sale of products at Celine, where revenues exceeded €2.1 billion last year.
This is will almost certainly make for a relatively complex (and compelling) uncoupling should Slimane and Celine part ways. Stay tuned.