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BFD Expert Voices - Retail Deals

BFD Expert Voices

Institutional Shareholder Services is advising Guess' shareholders to withhold their votes for the re-election of Paul and Maurice Marciano, brothers and co-founders, to the denim brand's board.

It also recommended that shareholders may want to withhold their votes for fellow board member Anthony Chidoni.

Why it matters: ISS, the most influential of the proxy advisers, holds a lot of sway with institutional shareholders. ISS recommendations (along with No. 2 proxy adviser Glass Lewis) often make the difference in a shareholder campaign. But not always.

Details: The proxy advisory firm focused mainly on Paul Marciano and the sexual misconduct allegations made against him. 

ISS wrote that "there is a credible risk to the Guess brand posed by Paul Marciano's continued involvement with the company," per a press release.

ISS went on to note the board's inability "to separate him from the company despite a growing chorus of public allegations of sexual misconduct."

"Removal of the Marcianos appears to be the only course available to begin a clean break in this long and sordid thread in the company's history," it added.

The other side: Guess said it is disappointed in ISS' recommendation "prior to the completion of the independent investigation and prior to the resulting recommendations of the demand review committee."

Regarding the sexual conduct allegations, "the company has strongly refuted these claims and is contesting them vigorously," according to a previous statement.

Between the lines: Paul Marciano faces multiple allegations of sexual misconduct. ISS criticized Guess' 2018 investigation into one of the allegations for its "lack of transparency."

It also said it's "hard to understand why the board did not consider gender among its criteria for membership on the special committee."

Despite the investigation, more lawsuits emerged in 2021, ISS pointed out.

The bottom line: This will still be a tough fight for Legion Partners, the activist agitating for change because the Marciano brothers hold a large stake in the company. But ISS just gave the activist a major boost.

ISS weighs in against Guess' Marciano brothers

The influential proxy adviser gives activist Legion Partners a boost.

Guess co-founders and brother Maurice and Paul Marciano, dressed in black, pose together for the camera at a party in Los Angeles.

Maurice and Paul Marciano, from left to right, attend a party in Los Angeles. Photo: Tommaso Boddi/Getty Images for Guess

Activist shareholders

<p>Institutional Shareholder Services is advising Guess&#x27; shareholders to withhold their votes for the re-election of Paul and Maurice Marciano, brothers and co-founders, to the denim brand&#x27;s board.</p><ul><li>It also recommended that shareholders may want to withhold their votes for fellow board member Anthony Chidoni.</li></ul>

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ISS weighs in against Guess' Marciano brothers

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