Fund Urges Removal of Guess Founders from Board Amid Sexual Misconduct Allegations
Legion Partners, an activist investment firm with a 2.5% ownership stake in Guess Inc, is advocating for the removal of the company’s co-founders, Paul and Maurice Marciano, from the board. The firm asserts that the sexual misconduct allegations against Paul Marciano are impeding the company’s growth. Despite recent positive strides made by CEO Carlos Alberini, Legion Partners believes that the continued involvement of the Marciano brothers casts a dubious shadow over the company’s operations.
Paul Marciano has been confronted with multiple accusations of sexual misconduct. In 2018, model Kate Upton publicly accused him of sexual harassment, and the following year, he was sued by a model who alleged sexual assault. Consequently, Paul resigned from his role as executive chairman of Guess’ board, with Maurice taking his place.
It has come to light that Guess and Paul Marciano reached non-disclosure settlements totaling $500,000 with five individuals who accused him of inappropriate behavior. Presently, both brothers serve as directors on Guess’ board, with Paul also holding the position of chief creative officer. Nevertheless, Legion Partners contends that both siblings should be ousted from the board, with Paul being removed due to his alleged actions and Maurice for purportedly disregarding them.
Guess, currently valued at $1.4 billion, has yet to comment on the matter. The Marciano brothers founded the company in 1981 and retain a 38% ownership stake. Over the past year, the company’s stock price has declined by approximately 12%.
Carlos Alberini assumed the position of CEO three years ago, and Legion Partners commends his efforts in implementing cost-cutting measures and other positive changes. The investment firm, known for its advocacy of corporate governance improvements, has previously exerted pressure on other retailers such as Kohl’s and Bed Bath & Beyond. In 2021, Legion Partners yielded a 35% return for its investors.
This call to remove the Guess founders from the board underscores the increasing emphasis on accountability and transparency in corporate governance. Activist investment firms like Legion Partners now closely scrutinize executive conduct and demand reforms to ensure ethical and responsible operations within companies. Guess must now address the allegations against the Marciano brothers and evaluate whether their continued involvement jeopardizes the company’s reputation and impedes its progress.
Useful links:
1. Guess Website
2. Legion Partners Website
