Business

Guess founder, accused repeatedly of sexual misconduct, holds onto board seat in contentious vote

Published

3 years ago

April 22, 2022

Guess founder, accused repeatedly of sexual misconduct, holds onto board seat in contentious vote

A proxy marketing campaign to drive Guess co-founders Paul Marciano and Maurice Marciano off the corporate’s board over a sexual assault scandal failed to attract sufficient votes Friday on the L.A. attire agency’s annual assembly — however the activist hedge fund behind the hassle has vowed to proceed its battle.

Legion Companions, an L.A. fund that has acquired a 2.5% stake in Guess, had requested shareholders to withhold assist for the reappointments of administrators Paul Marciano and his brother Maurice, who’s accused of turning a blind eye to sexual harassment and assault allegations towards Paul. A few of the allegations return a number of many years, others surfaced in lawsuits filed this 12 months.

Paul Marciano, 70, and his attorneys have denied any wrongdoing.

Legion’s proxy marketing campaign drew the assist of the 2 main shareholder advisory corporations, which stated the corporate’s continued affiliation with the Marciano brothers posed a danger for the model. That assist got here despite the fact that the marketing campaign had just about no probability of succeeding because the brothers maintain about 41% of excellent shares.

The fund didn’t nominate its personal slate of administrators. It relied on an organization coverage that requires any director in an uncontested election who receives a better variety of votes “withheld” than votes “for” should submit a resignation letter for consideration by a board committee. Legion didn’t attain that threshold.

The corporate introduced that primarily based on preliminary vote outcomes, the Marciano brothers and two different board members had been reelected.

“We’ll proceed to have interaction with our shareholders, and we stay steadfast in our dedication to performing in the very best curiosity of the Firm and all Guess shareholders. The Board of Administrators takes its fiduciary duties very severely, believes in due course of and can proceed to make its choices primarily based on factual findings,” Guess stated in a press release.

Paul Marciano is one in all 4 brothers who moved to Los Angeles from France and in 1981 based the corporate. It grew right into a worldwide attire and equipment retailer, with advertising campaigns led by Paul that featured celeb fashions comparable to Anna Nicole Smith, Kate Upton and others. Two different brothers left the corporate years in the past.

Guess operates greater than 1,000 shops worldwide and earned $171 million on $2.6 billion in gross sales in its final fiscal 12 months, although it’s now not the stylish model it as soon as was. The hedge fund argues that the allegations have depressed the corporate’s inventory regardless of a turnaround led by Chief Government Carlos Alberini.

“We really feel strongly that there are some elements of this case which can be acceptable for us to proceed to pursue through potential litigation targeted on board fiduciary points,” stated Ted White, managing director at Legion, in response to the vote.

In the previous couple of years, Legion has waged profitable campaigns to alter the boards at retailers Mattress, Bathtub & Past and Kohl’s. It started investing in Guess in October after assembly with the corporate and deciding that the turnaround was being held again by the brothers’ continued affiliation with the corporate, in response to a regulatory submitting.

Amid the burgeoning #MeToo motion in 2018, Sports activities Illustrated swimsuit mannequin Kate Upton gave an interview alleging Paul Marciano had groped and kissed her throughout the shoot for a 2010 advert marketing campaign when she was 18 — and when she rebuffed him, he later referred to as her “disgusting” and a “fats pig.”

He referred to as the allegations “preposterous,” however different ladies got here ahead accusing him of inappropriate feedback and texts and undesirable advances together with kissing and groping, in response to an organization regulatory submitting.

That prompted a board investigation that concluded “on sure events, Mr. Marciano exercised poor judgment in his communications with fashions and photographers and in putting himself in conditions by which believable allegations of improper conduct might, and did, come up,” the submitting stated.

The corporate entered into settlement agreements with 5 ladies that totaled $500,000. Marciano stepped down as government chairman in 2018 and was to transition out of his function as chief artistic officer. Nevertheless, the following 12 months Guess did an about-face and introduced he would keep on within the artistic officer place.

In January 2021, a lawsuit was filed in Los Angeles Superior Court docket by an unidentified mannequin that reignited the scandal.

She alleged that Paul Marciano had sexually harassed her after she started working for Guess in 2017. Then, after taking a hiatus to present beginning, the girl alleged she met him at a West Hollywood deal with in February 2020 for what she thought can be a dialogue of recent picture shoots. Nevertheless, the area turned out to be an empty house the place she alleged Marciano compelled her to carry out oral intercourse.

That allegation was adopted by a federal intercourse trafficking lawsuit introduced in October by an aspiring Guess mannequin who claims Paul Marciano raped her in 2013 in a Beverly Hills lodge room, the place she had met him anticipating to debate working for the corporate. The unidentified mannequin stated she later did check pictures for Guess however was by no means given any work.

Marciano’s attorneys have referred to as the most recent allegations “baseless.”

Earlier than the proxy struggle started, Legion early this 12 months demanded that the Guess board start investigations into its oversight of Paul Marciano and into any workers, officers and administrators whose conduct may need precipitated hurt to the corporate. It additionally sought details about the well being of Maurice, 73, who suffered extreme accidents in a 2020 bicycle accident from which he’s nonetheless recovering.

Legion additionally despatched a letter to the board that it launched demanding the elimination of the Marciano brothers, arguing they offered a cloth danger to the agency’s turnaround efforts. Guess responded by publicly defending administration and its latest monetary outcomes. It stated it “strongly refuted” the most recent claims of sexual wrongdoing towards Paul Marciano and was “contesting them vigorously.”

Legion started its proxy marketing campaign March 16 after Guess indicated it deliberate to re-nominate the brothers to board seats. That week, a 3rd lawsuit was filed accusing the board of aiding and abetting sexual harassment by permitting Paul Marciano to remain on the firm.

The go well with detailed allegations by a 3rd unidentified mannequin who stated she labored extensively for Guess and had been sexually harassed by Paul Marciano throughout a July 2020 picture shoot at Lake Como in Italy. The lawsuit doesn’t identify him as a defendant.

Distinguished Los Angeles legal professional Lisa Bloom, whose agency dealt with the three new lawsuits, held a press convention that week throughout which all three fashions and different accusers spoke.

The mannequin who alleged Marciano compelled oral intercourse on her recognized herself as Amanda Rodriguez and tearfully learn a press release saying the incident had precipitated “flashbacks, panic assaults, nightmares, debilitating despair and suicidal ideas.”

Her lawsuit is now in arbitration.

Following the press convention, the mannequin who made the federal intercourse trafficking allegations modified attorneys and dropped her lawsuit. Her new legal professional didn’t return a request for remark.

In a press release, Marciano’s legal professional, Gary Jay Kaufman, stated the “dismissed lawsuit was baseless like others filed by Ms. Bloom and, in these instances too, we’re extraordinarily assured that we are going to prevail in a court docket of legislation the place details matter.”

Legion established an internet site for its marketing campaign referred to as A Higher Guess and printed an investor presentation tallying different sexual harassment and assault allegations towards Paul Marciano. The presentation stated the corporate has paid $920,000 in settlements since 2018 associated to allegations towards Paul Marciano and contained hyperlinks to lawsuits relationship way back to 1994.

Whereas Legion has praised the turnaround below Alberini, who was appointed after the 2018 intercourse scandal, it has traded jabs with the corporate over the efficiency of the inventory. Shares are down over the previous 12 months regardless of positive factors by the Customary & Poor’s 500 and had been down about 4% at $22.94 on the shut of buying and selling Friday, after the vote outcomes had been introduced. Final month, Guess introduced a $175-million accelerated share buyback program.

The corporate stated it had tried to achieve a “mutually agreeable path ahead” with Legion, together with a brand new environmental, social and governance committee and the share buybacks, however was rejected. It additionally introduced the formation of a board committee of unbiased administrators assisted by outdoors authorized counsel to probe the post-2018 allegations towards Paul Marciano.

Guess stood by its place of re-nominating the Marciano brothers to the board and stated Legion’s marketing campaign is “primarily based on info from the media and from misinformed and uncorroborated sources.”

ISS, one of many two shareholder advisory corporations, sided with Legion, concluding that whereas the 2 brothers made “outsized contributions” to the corporate’s success over the previous 40 years, that was “irrelevant” to the present scenario. It added that “elimination of the Marcianos seems to be the one course out there to start a clear break on this lengthy and sordid thread within the firm’s historical past.”

Glass Lewis, the opposite advisory agency, acknowledged the Marciano’s Guess stake doubtless doomed Legion’s marketing campaign however stated the corporate would profit by “transferring on” from the Marcianos as administrators whereas the board ought to overview Paul Marciano’s employment given “the intensive record of allegations of sexual misconduct and settlements and his speedy affect on the tradition of the enterprise.”

Through the agency’s heyday the Marciano brothers made the Forbes 400 record of richest People however haven’t accomplished so in years. Guess’ market cap nowadays is $1.4 billion, effectively beneath the place it was at its apex some 15 years in the past when the inventory was round $50 a share.

Susan Anderson, a retail analyst at B. Riley, agreed the inventory value is lagging however stated the model has skilled a resurgence below its chief government and Paul Marciano’s son Nicolai Marciano, who has had a hand in growing fashions for the corporate’s youthful prospects.

She stated it was unclear at this level what function the Marciano brothers are taking part in within the firm’s efficiency. “Clearly they constructed a fantastic model,” she stated. “It’s exhausting to say if they’re making a major influence on the model proper now.”

Business

As Delta Reports Profits, Airlines Are Optimistic About 2025

Published

9 hours ago

January 11, 2025

Press Room

As Delta Reports Profits, Airlines Are Optimistic About 2025

This year just got started, but it is already shaping up nicely for U.S. airlines.

After several setbacks, the industry ended 2024 in a fairly strong position because of healthy demand for tickets and the ability of several airlines to control costs and raise fares, experts said. Barring any big problems, airlines — especially the largest ones — should enjoy a great year, analysts said.

“I think it’s going to be pretty blue skies,” said Tom Fitzgerald, an airline industry analyst for the investment bank TD Cowen.

In recent weeks, many major airlines upgraded forecasts for the all-important last three months of the year. And on Friday, Delta Air Lines said it collected more than $15.5 billion in revenue in the fourth quarter of 2024, a record.

“As we move into 2025, we expect strong demand for travel to continue,” Delta’s chief executive, Ed Bastian, said in a statement. That put the airline on track to “deliver the best financial year in Delta’s 100-year history,” he said.

The airline also beat analysts’ profit estimates and said it expected earnings per share, a measure of profitability, to rise more than 10 percent this year.

Delta’s upbeat report offers a preview of what are expected to be similarly rosy updates from other carriers that will report earnings in the next few weeks. That should come as welcome news to an industry that has been stifled by various challenges even as demand for travel has rocketed back after the pandemic.

“For the last five years, it’s felt like every bird in the sky was a black swan,” said Ravi Shanker, an analyst focused on airlines at Morgan Stanley. “But it appears that this industry does have its ducks in a row.”

That is, of course, if everything goes according to plan, which it rarely does. Geopolitics, terrorist attacks, air safety problems and, perhaps most important, an economic downturn could tank demand for travel. Rising costs, particularly for jet fuel, could erode profits. Or the industry could face problems like a supply chain disruption that limits availability of new planes or makes it harder to repair older ones.

Early last year, a panel blew off a Boeing 737 Max during an Alaska Airlines flight, resurfacing concerns about the safety of the manufacturer’s planes, which are used on most flights operated by U.S. airlines, according to Cirium, an aviation data firm.

The incident forced Boeing to slow production and delay deliveries of jets. That disrupted the plans of some airlines that had hoped to carry more passengers. And there was little airlines could do to adjust because the world’s largest jet manufacturer, Airbus, didn’t have the capacity to pick up the slack — both it and Boeing have long order backlogs. In addition, some Airbus planes were afflicted by an engine problem that has forced carriers to pull the jets out of service for inspections.

There was other tumult, too. Spirit Airlines filed for bankruptcy. A brief technology outage wreaked havoc on many airlines, disrupting travel and resulting in thousands of canceled flights in the heart of the busy summer season. And during the summer, smaller airlines flooded popular domestic routes with seats, squeezing profits during what is normally the most lucrative time of year.

But the industry’s financial position started improving when airlines reduced the number of flights and seats. While that was bad for travelers, it lifted fares and profits for airlines.

“You’re in a demand-over-supply imbalance, which gives the industry pricing power,” said Andrew Didora, an analyst at the Bank of America.

At the same time, airlines have been trying to improve their businesses. American Airlines overhauled a sales strategy that had frustrated corporate customers, helping it win back some travelers. Southwest Airlines made changes aimed at lowering costs and increasing profits after a push by the hedge fund Elliott Management. And JetBlue Airways unveiled a strategy with similar aims, after a less contentious battle with the investor Carl C. Icahn.

Those improvements and industry trends, along with the stabilization of fuel, labor and other costs, have created the conditions for what could be a banner 2025. “All of this is the best setup we’ve had in decades,” Mr. Shanker said.

That won’t materialize right away, though. Travel demand tends to be subdued in the winter. But business trips pick up somewhat, driven by events like this week’s Consumer Electronics Show in Las Vegas.

The positive outlook for 2025 is probably strongest for the largest U.S. airlines — Delta, United and American. All three are well positioned to take advantage of buoyant trends, including steadily rebounding business travel and customers who are eager to spend more on better seats and international flights.

But some smaller airlines may do well, too. JetBlue, Alaska Airlines and others have been adding more premium seats, which should help lift profits.

While he is optimistic overall, Mr. Shanker acknowledged that the industry was vulnerable to a host of potential problems.

“I mean, this time last year you were talking about doors falling off planes,” he said. “So who knows what might happen.”

Business

Insurance commissioner issues moratorium on home policy cancellations in fire zones

Published

10 hours ago

January 11, 2025

Press Room

Insurance commissioner issues moratorium on home policy cancellations in fire zones

California Insurance Commissioner Ricardo Lara has issued a moratorium that bars insurers from canceling or non-renewing home policies in the Pacific Palisades and the San Gabriel Valley’s Eaton fire zones.

The moratorium, issued Thursday, protects homeowners living within the perimeter of the fire and in adjoining ZIP codes from losing their policies for one year, starting from when Gov. Gavin Newsom declared a state of emergency on Wednesday.

The moratoriums, provided for under state law, are typically issued after large fires and apply to all policyholders regardless of whether they have suffered a loss.

Lara also urged insurers to pause for six months any pending non-renewals or cancellations that were issued up to 90 days before Jan. 7 that were to take effect after the start of the fires — something he does not have authority to prohibit.

“I call upon all property insurance companies to halt these non-renewals and cancellations and provide essential stability for our communities, allowing consumers to focus on what’s important at the moment — their safety and recovery,” said Lara on Friday during a press conference in downtown Los Angeles.

Insurance companies in California have wide latitude to not renew home policies after they expire, though they must provide at least 75 days’ notice. However, policies in force can be canceled only for reasons such as non-payment and fraud.

Insurers have dropped hundreds of thousands of policyholders across California in recent years citing the increasing risk and severity of wind-driven wildfires attributed to climate change. The insurance department said residents living in fire zones can be subject to sudden non-renewals, prompting the need for the moratoriums.

In addition, Lara asked insurers to extend to policyholders affected by the fires time to pay their premiums that go beyond the existing 60-day grace period that is mandatory under state law.

It’s not clear how many homeowners in Pacific Palisades and elsewhere might not have had coverage, but many homeowners reported that insurers had not renewed their policies before the disaster struck. State Farm last year told the Department of Insurance it would not renew 1,626 policies in Pacific Palisades when they expired, starting last July.

Residents can visit the Department of Insurance website at insurance.ca.gov to see if their ZIP codes are included in the moratorium. They can also contact the department at (800) 927-4357 or via chat or email if they think their insurer is in violation of the law.

The Pacific Palisades fire, the most destructive fire in Los Angeles history, as of Friday morning had grown to more than 20,000 acres, burning more than 5,000 homes, businesses and other buildings. It was 6% contained.

The Eaton fire, which has burned many structures in Altadena and Pasadena, has spread to nearly 14,000 acres and was 3% contained as of early Friday. Ten people have died in the fires.

Business

In Los Angeles, Hotels Become a Refuge for Fire Evacuees

Published

21 hours ago

January 10, 2025

Press Room

In Los Angeles, Hotels Become a Refuge for Fire Evacuees

The lobby of Shutters on the Beach, the luxury oceanfront hotel in Santa Monica that is usually abuzz with tourists and entertainment professionals, had by Thursday transformed into a refuge for Los Angeles residents displaced by the raging wildfires that have ripped through thousands of acres and leveled entire neighborhoods to ash.

In the middle of one table sat something that has probably never been in the lobby of Shutters before: a portable plastic goldfish tank. “It’s my daughter’s,” said Kevin Fossee, 48. Mr. Fossee and his wife, Olivia Barth, 45, had evacuated to the hotel on Tuesday evening shortly after the fire in the Los Angeles Pacific Palisades area flared up near their home in Malibu.

Suddenly, an evacuation alert came in. Every phone in the lobby wailed at once, scaring young children who began to cry inconsolably. People put away their phones a second later when they realized it was a false alarm.

Similar scenes have been unfolding across other Los Angeles hotels as the fires spread and the number of people under evacuation orders soars above 100,000. IHG, which includes the Intercontinental, Regent and Holiday Inn chains, said 19 of its hotels across the Los Angeles and Pasadena areas were accommodating evacuees.

The Palisades fire, which has been raging since Tuesday and has become the most destructive in the history of Los Angeles, struck neighborhoods filled with mansions owned by the wealthy, as well as the homes of middle-class families who have owned them for generations. Now they all need places to stay.

Many evacuees turned to a Palisades WhatsApp group that in just a few days has grown from a few hundred to over 1,000 members. Photos, news, tips on where to evacuate, hotel discount codes and pet policies were being posted with increasing rapidity as the fires spread.

At the midcentury modern Beverly Hilton hotel, which looms over the lawns and gardens of Beverly Hills, seven miles and a world away from the ash-strewed Pacific Palisades, parking ran out on Wednesday as evacuees piled in. Guests had to park in another lot a mile south and take a shuttle back.

In the lobby of the hotel, which regularly hosts glamorous events like the recent Golden Globe Awards, guests in workout clothes wrestled with children, pets and hastily packed roll-aboards.

Many of the guests were already familiar with each other from their neighborhoods, and there was a resigned intimacy as they traded stories. “You can tell right away if someone is a fire evacuee by whether they are wearing sweats or have a dog with them,” said Sasha Young, 34, a photographer. “Everyone I’ve spoken with says the same thing: We didn’t take enough.”

The Hotel June, a boutique hotel with a 1950s hipster vibe a mile north of Los Angeles International Airport, was offering evacuees rooms for $125 per night.

“We were heading home to the Palisades from the airport when we found out about the evacuations,” said Julia Morandi, 73, a retired science educator who lives in the Palisades Highlands neighborhood. “When we checked in, they could see we were stressed, so the manager gave us drinks tickets and told us, ‘We take care of our neighbors.’”

Hotels are also assisting tourists caught up in the chaos, helping them make arrangements to fly home (as of Friday, the airport was operating normally) and waiving cancellation fees. A spokeswoman for Shutters said its guests included domestic and international tourists, but on Thursday, few could be spotted among the displaced Angelenos. The heated outdoor pool that overlooks the ocean and is usually surrounded by sunbathers was completely deserted because of the dangerous air quality.

“I think I’m one of the only tourists here,” said Pavel Francouz, 34, a hockey scout who came to Los Angeles from the Czech Republic for a meeting on Tuesday before the fires ignited.

“It’s weird to be a tourist,” he said, describing the eerily empty beaches and the hotel lobby packed with crying children, families, dogs and suitcases. “I can’t imagine what it would feel like to be these people,” he said, adding, “I’m ready to go home.”

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