CFO, Director Depart Guess During Activist Campaign

CFO, Director Depart Guess During Activist Campaign
A female CFO and director have departed the clothing brand and retailer, after Legion Partners launched a 'vote no' campaign targeting allegations of sexual harassment.

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A female CFO and director recently departed clothing brand and retailer Guess? Inc. (GES) as an activist campaign continues targeting allegations of sexual harassment surrounding a co-founder.

On March 16, Guess? announced that Katie Anderson, the company’s CFO, was stepping down to pursue an opportunity at a privately held corporation. A former CFO at the Los Angeles-based retailer, Dennis Secor, was appointed interim CFO.

On Monday, March 28, Guess? said director Laurie Ann Goldman, a board member since 2018, won’t stand for reelection at the company’s upcoming annual meeting “because of significant other professional commitments, including being recently appointed to serve as chair of another company’s board.”

The departures come after activist Legion Partners Asset Management LLC in February launched a “vote no” campaign urging shareholders to vote to remove co-founders Paul and Maurice Marciano from their director positions in an uncontested election set for April 22. The Los Angeles-based activist alleged that over the past decade Paul Marciano has been publicly accused of sexual misconduct by at least 11 women while his brother, Maurice, “appeared to turn a blind eye” as chairman of the board for much of the time.

It is unclear whether the recent senior departures at Guess? are connected in any way to concerns involving Paul Marciano or Legion’s related campaign. Guess? did not return requests for comment.

Legion on Wednesday filed its definitive proxy statement for the withhold vote campaign. Analysts following the company have told The Deal that the Chris Kiper-led fund’s involvement could drive a sale of the clothing company, which has a $1.3 billion market capitalization.

According to relationship mapping service BoardEx, a sister company to The Deal, departing director Goldman serves on the boards of two other public companies, including Terminix Global Holdings Inc. (TMX), as well as six private companies, including Claire’s Holdings LLC, owner of the Claire’s fashion brand and retail chain, where she joined in February as chair.

Goldman’s departure leaves two women on the seven-person Guess? board.

In a statement on March 17, Guess? said Legion has created a “massive distraction to the senior executives who have performed extremely well.” It added that the removal of two individuals “who have been critical to our success would be very destabilizing” and that Legion’s campaign is based on “information from the media and from misinformed and uncorroborated sources.”

Legion probably will have a difficult time driving change at Guess? with its campaign. According to FactSet Research Systems Inc., the two founders control a 38% stake, which could prove to be a serious obstacle for the activist investor. A traditional director contest pitting dissident nominees against incumbents wouldn’t have worked considering the founders’ stake.

Legion is likely hoping to show that a large majority of unaffiliated shareholders opposed the two co-founders, in an effort to pressure the company to oust them.

One activism adviser noted that in 2015 little-known fund H Partners Management LLC was very successful with a “vote no” campaign that resulted in the ousting Tempur Sealy International Inc.’s (TPX) CEO and changes to the board. He added, however, that it isn’t easy for activists to drive change with “vote no” efforts.

“It is a threat; sometimes it puts the company under pressure. There are examples where it does something, but they are few and far between. It is one of the tools in the toolkit for an activist,” he said.

This article originally was posted on The Deal on March 31, 2022 by Ron Orol. View the original article here.

Follow Ronald Orol on Twitter and LinkedIn.

About the author

Ronald Orol
Senior Editor at | + posts

Ronald Orol leads coverage of activist hedge fund managers, a high-profile group of corporate investors who press for blockbuster deals and were the subject of his book “Extreme Value Hedging: How Activist Hedge Fund Managers Are Taking on the World.” Ron produces the Activist Daily and Activist Weekly briefings, which offer exclusives, trend pieces and breaking analysis about insurgent investors and their M&A efforts. Ron also authored “Corporate Governance in the Era of Activism,” a digital handbook for CNBC’s Jim Cramer. He previously worked as a financial regulation and activism reporter at MarketWatch and Dow Jones Newswires.

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