Legion Partners issued a public letter Tuesday morning calling for the removal of Guess Inc. co-founders and directors Paul and Maurice Marciano after repeated allegations of sexual misconduct and assault. The Wall Street Journal, which first reported the activist investor demand, says Legion has a “roughly” 2.5% stake in Guess. “As investors, we are deeply concerned by the lack of good judgment the Board of Directors (“the Board”) of Guess has displayed in continuing to allow co-founder Paul Marciano to serve as a Board member and as Chief Creative Officer of the Company. As human beings, we are appalled,” the letter says. Legion goes on to cite multiplemediareports of allegations going back decades. While praising Guess’ Chief Executive Carlos Alberini for steps take to improve the business, Legion says the company can’t reach its “full potential” as long as the Marcianos put Guess at reputational and legal risk. “The fact that the Board somehow still justifies it today – when investors, customers, regulators and other stakeholders have repeatedly made clear there should be zero tolerance for executives who abuse their power to sexually exploit employees – is astonishing,” the letter said. “This Board already conducted an investigation, and despite troubling findings, re-installed Paul Marciano in a senior executive position at the Company, empowering him to continue his alleged predatory behavior. The result has been multiple new allegations, at least one new settlement and potentially more liability that may not be covered by insurance.” Guess stock rallied 5.2% in Tuesday trading, but is down 8% over the past year while the S&P 500 index has gained 15.2% over the period.
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