LOS ANGELES — After a nasty dust-up between an activist investor and the cofounders of Guess Inc., brothers Paul and Maurice Marciano have kept their seats on the company’s board of directors.
Also approved to be on the board were nominees Anthony Chidoni and Cynthia Livingston.
“Shareholders have recognized that Guess’ clearly defined transformation plan to elevate the Guess and Marciano brands, redefine the company’s global e-commerce strategy, optimize our store footprint, enhance our supply chain and drive efficiencies across the business is driving positive momentum and meaningful financial results,” the company said in a statement.
For months, Legion Partners, which owns 2.5 percent of Guess shares, has been lobbying for the executives’ removals, claiming there were new sexual assault and harassment allegations against Paul Marciano, the chief creative officer in charge of marketing and ad campaigns at the Los Angeles-based contemporary clothing company.
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The investor group maintained that Maurice Marciano “appeared to turn a blind eye as the former chairman of the board and the company spent nearly $1 million on settlements with alleged victims.”
In a PowerPoint presentation to shareholders, Guess acknowledged that Maurice, who left his executive job in 2015, had not attended many meetings during fiscal 2022, which ended Jan. 29, because of injuries suffered from a bicycle accident. But his condition has improved, and he is expected to attend regular meetings going forward.
Legion Partners has maintained that models hesitated to work with Guess and that customers didn’t want to shop at Guess because of the sexual harassment claims. In addition, the investor group claimed there was a “stock discount” due to allegations made against Paul Marciano.
After the shareholder vote, Legion Partners pointed out that 83 percent of the non-insider shareholders voted not to retain Paul Marciano. The Marciano brothers own about 41 percent of the company stock.
“It is inconceivable and deeply troubling that in today’s world someone like Paul Marciano could remain in a senior executive role despite more than a dozen sexual harassment allegations against him,” Legacy Partners said in a statement. “It is also disappointing that Paul’s brother, Maurice, has — in our view — helped perpetuate the status quo.…As shareholders, we believe that the current state of affairs is a stain on Guess’ reputation and indicates a culture of poor governance and failed oversight.”
In February 2018, Paul Marciano, the company’s chairman and chief creative officer, stepped down from his day-to-day duties while an investigation was conducted into sexual-harassment accusations by Kate Upton, who once modeled for the denim specialist between 2010 and 2011.
Days earlier, the company’s board of directors had formed a special committee with two independent directors to oversee a sexual-harassment investigation, which was conducted by the law firm of O’Melveny & Myers. However, three weeks later, the investigation was taken over by Glaser Well, the same law firm that was the legal counsel to the special committee formed to oversee the harassment investigation.
A year later, Paul Marciano quietly returned to his old job later but relinquished it title of executive chairman.
Earlier this year, two former models, who have accused the chief creative officer of sexual misconduct, filed a lawsuit in Los Angeles County Superior Court against Guess’ board members claiming they aided and abetted sexual harassment. The models were Amanda Rodriguez and Gwen, who declined to state her last name.
The brouhaha over whether the Marcianos should remain on the board has not affected the company’s profits and sales. For the fiscal year ended Jan. 29, Guess had adjusted net earnings of $194.7 million, an 85.4 percent increase from $105 million for fiscal 2020.
Net revenues in fiscal 2022 decreased 3.2 percent to $2.59 billion from $2.68 billion in fiscal 2020.
The storied denim company is one of the largest apparel ventures in Los Angeles. It was formally founded in 1981 by Georges Marciano, who was joined by his brother Maurice. Paul and Armand joined later. Georges left the company in 1993, selling his stake for $214 million and investing in commercial real estate and art. He now resides in Montreal.
Armand left Guess in 2002 to work with ABS by Allen Schwartz, a long-time Los Angeles fashion label. Marciano left that venture in 2015.
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