Activist pressure is shining a spotlight on both new and old sexual harassment allegations against Paul Marciano, the Guess Inc. cofounder and chief creative officer.
Marciano was to step away from the company after a flurry of misconduct allegations — first from model Kate Upton in 2018 — but managed to stay on in 2019 while giving up his title of executive chairman.
But Guess shareholder Legion Partners said it was time for Marciano to leave his executive role and that both he and his brother, Maurice Marciano, should exit the board.
Guess shot back that it established a special committee that investigated the allegations in 2018, interviewing more than 40 people and reviewing about 1.5 million pages of documents.
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That effort found at the time that Marciano “exercised poor judgment in his communications with models and photographers and in placing himself in situations in which plausible allegations of improper conduct could, and did, arise.” The company also settled five claims of misconduct for a total of $500,000 without admitting liability or fault.
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Late Tuesday, Guess said: “Regarding subsequent allegations against Mr. Marciano, the company has strongly refuted these claims and is contesting them vigorously. The board will continue to act in accordance with the company’s high standards, including upholding strong internal processes and appropriate board oversight and review of all related party transactions.”
Legion Partners told WWD that, “The fact that the board cites its 2018 investigation to help justify its continued support of Paul Marciano … not only shows how out of touch the directors are with their stakeholders, but frankly makes no sense.”
On Monday, Legion sent a letter to the company’s directors, noting, “For more than a decade, a pattern of appalling sexual assault and harassment allegations have been made against Paul Marciano, while his brother Maurice Marciano appeared to turn a blind eye as a former chairman of the board.”
Legion maintained that the pattern has continued.
“A little more than a month ago, the insurance carrier that underwrites the company and Paul Marciano sued to absolve itself of any responsibility for covering claims related to Paul Marciano’s alleged ‘pattern’ of ‘wrongful acts,’” the investor wrote. “This rare action was precipitated by a lawsuit filed last January by a former model accusing Paul Marciano of rape and Guess of enabling his behavior for years.”
Legion also charged that, “The Marciano brothers’ influence has not only cast a shadow over the company’s reputation, but the legitimacy of various financial transactions” including leasing warehouse space from partnerships affiliated with the brothers and paying aircraft management fees to Marciano entities.
The one area where the investor and Guess see eye to eye is its current strategy direction.
“Under the leadership of current [chief executive officer] Carlos Alberini [the company] has made a number of positive strategic moves in recent years, including optimizing its store portfolio, improving supply chain and logistics, and implementing significant cost savings and profit improvement plans,” Legion said.
“Mr. Alberini appears to be a talented CEO who has demonstrated substantial progress executing an operational turnaround at the company,” the investor said. “However, we do not believe that Guess will ever be able to reach its full potential with the persistent overhang of legal, reputational and moral risk that accompanies the Marciano brothers remaining on the board or continuing to serve in any role inside the company.”
Guess said, “As we look ahead, we are confident that our highly engaged board and leadership team will continue to deliver on our strategic priorities and to build on Guess’s strong momentum.”
Shares of Guess were up 3.1 percent to $24.09 on Wednesday, marking an 11 percent gain since Legion’s letter was revealed.
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