Neil Katz will become the company's interim CEO, while the board will be joined by two other new members, Anthony D'Agosting and Robert Mitzman. This brings the total number of board members to six, all of whom will have equal representation.
The new board of directors was nominated by Glenn Nussdorf, who owns a 12 per cent share of Parlux Fragrances, and also has interests in several associated businesses.
Described as an 'amicable resolution', the announcement also means that the directors have dismissed with prejudice its lawsuit against Nussdorf, while he in turn has agreed to drop any further action to have the executive board replaced.
Nussdorf will continue to work on a consultancy basis for Parlux in the areas of brand licensing and international distribution.
The agreement ends a long-standing struggle between Lekach and Nussdorf over control of the company and issues with management direction that have focused on overstocking and falling performance.
"My consent solicitation was about performance at Parlux, and the value of the shares which I and every other Parlux stockholder own," said Nussdorf.
"It was never about me. With a reconstituted Board of Directors and with Neil Katz serving as interim CEO, I am satisfied that I have achieved our goals."
News of the resolution was well received by the investment world, with share prices closing at a 17 per cent gain on the NYSE yesterday, at $7.16.
But Lekach is not leaving empty-handed, as the board agreed that he would receive a $1.2m severance pay as permission to apply for a set amount of common stock at a preferential rate.
"We are pleased this dispute has been resolved and Parlux is able to avoid further cost and disruption," said Glenn Gopman, a continuing director of Parlux. "The settlement will enable the reconstituted Board of Directors and management to devote their full attention to Parlux's business."
The executive board struggle is the last in a long line of challenges that the company has had to face, including the recent sale of the licensing right to its number one selling brand, Perry Ellis. However, the company still holds the right to the Paris Hilton brand and recently signed a licensing deal with global fashion retailer Ed Hardy.