Guess: Marciano brothers retain board of directors’ seats
Last Friday, the shareholders’ AGM of US fashion group Guess confirmed Paul and Maurice Marciano as board members. A victory for the brothers, who remain in charge of the group founded in Los Angeles in the early 1980s.
It was an atypical AGM for the Guess group, whose sales began to grow again last year. In the hushed world of corporate boardrooms, knives are usually cached out of sight under three-piece suits, but they had been visibly unsheathed within the Californian group for several weeks.
Brothers Paul and Maurice Marciano have been lambasted by the Legion Partners investment fund, which called on shareholders to vote against their reappointment to the group's board of directors. The fund, which owns a 2.5% stake in the Guess group, believes that the accusations of harassment and sexual assault levelled against Paul Marciano, the label’s creative director, constitute a high reputational risk for Guess. While Paul’s brother Maurice has also come under fire, for failing to take the necessary measures to clarify the situation.
Legion Partners’ attack was taken seriously by Guess’s senior management, which sent a note to the shareholders on April 12, urging them to confirm the Marciano brothers, as well as Anthony Chidoni and Cynthia Livingston, as members of the group's board of directors. The note rebutted the accusations brought by Legion Partners, and accused the latter of wanting to destabilise the group. It added that “Guess has discussed these issues several times, and will continue to do so in the future, in appropriate fashion, with Guess shareholders.”
Proof that there was great pressure on Paul and Maurice Marciano is the fact they also had to face a salvo from Georges Marciano, whose relationship with his brothers had cooled since he sold his stake in the group in 1993. Georges, who is now active in the hotel business in Montreal and has always cast himself as the initiator of Guess, issued a press release on April 14, a week before the group's AGM, denouncing his erasure from the official history of the label’s founding, as propagated by his brothers. The timing does not seem random, and Georges Marciano's communiqué ended on a blistering note: “history has its eyes trained on us: liars will be remembered as liars, or worse. Guess’s is a great story, and it deserves truth and respect.”
Last Friday, in Los Angeles, the last two Marciano brothers sitting on the group’s board (Armand left the group in 2003) seemed to be skating on thin ice indeed. The Guess shareholders however reappointed both Paul and Maurice Marciano to the board.
All the motions put forward at the AGM were approved, and the group's senior management underlined its satisfaction in a statement: “The board of directors and the management team remain focused on maintaining Guess's current momentum, on executing our transformation strategy, and on ensuring long-term growth and value creation. We will continue to engage with our shareholders, and we stand firm in our commitment to act in the best interests of the company and all Guess shareholders. The board of directors takes its fiduciary duties very seriously, believes in due process and will continue to make its decisions based on factual findings.”
Legion Partners responded promptly to this statement, noting that the Marciano brothers failed to receive the support of small shareholders. “The fact that about 83% of non-insider shareholders who voted backed Paul Marciano’s removal from the board speaks volumes. Paul Marciano may have eked out a win at today’s AGM, but he cannot hide from the persistent reputational and valuation risks we believe his continued presence poses to Guess. It is inconceivable and deeply troubling that, in today's world, someone like Paul Marciano can remain in a senior leadership role despite more than a dozen allegations of sexual harassment against him. It is also disappointing that Paul's brother Maurice is, in our view, helping to perpetuate the status quo.”
In other words, the battle seems far from over.
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