Fund wants Guess founders to quit board amid sexual misconduct allegations – source

The Guess logo is seen at a factory outlet in Metzingen, Germany June 16, 2017. REUTERS/Michaela Rehle

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BOSTON, Feb 7 (Reuters) – An activist investment firm wants Guess? Inc (GES.N) to remove the two brothers who co-founded the retailer, arguing that sexual misconduct allegations against one of them are holding the company back, a source familiar with the matter said on Monday.

Legion Partners, which owns 2.5% of Guess, believes co-founders Paul and Maurice Marciano’s continued involvement in the business casts a shadow over the company’s operations, including recent positive moves by CEO Carlos Alberini, the person said.

Paul Marciano was sued last year by a model who accused him of sexually assaulting her and model Kate Upton publicly accused him of sexual harassment in 2018. He resigned as executive chairman of the board of directors. administration of Guess in June 2018 and was succeeded by his brother. , Mauritius.

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At the time, Guess and Paul Marciano signed non-confidential settlement agreements for $500,000 with five people who accused him of improper conduct, according to a regulatory filing.

Both men are now directors of the eight-member Guess board of directors, and Paul also holds the title of chief creative officer. Legion argues that the two must leave; Paul for his alleged behavior and Maurice for ignoring him, according to the person.

The Wall Street Journal first reported the story on Monday.

A representative for Guess, which is valued at $1.4 billion, did not immediately respond to a request for comment.

The brothers founded the company in 1981 and own 38% of it, according to Refinitiv data. Over the past year, the company’s stock price has fallen about 12%.

The company hired Carlos Alberini three years ago and Legion appreciates the changes he has made, including cutting costs, said the source, who is not authorized to speak publicly about the private matter.

Legion has already pushed for changes at retailers Kohl’s and Bed Bath & Beyond and places a strong emphasis on corporate governance. In 2021, Legion returned 35%, according to investors in the fund.

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Reporting by Svea Herbst-Bayliss; Edition by Lincoln Feast.

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