Guess? Inc. directors agreed to a settlement worth as much as $30 million to resolve claims they turned a blind eye to co-founder Paul Marciano’s harassment of the company’s models despite sexual misconduct allegations leveled by supermodel Kate Upton and others.
The board members agreed to an accord that calls for $22 million to be paid to settle a pension fund’s lawsuit alleging they allowed Marciano to treat the company’s models “as his personal harem” and failed to monitor the millionaire fashion designer, according to court filings. Guess? is suing its insurers for the remaining $8 million, according to Delaware Chancery Court filings.
Directors said Friday in the filings that they agreed to pay the money –- slated to go back into the company’s coffers rather than to the pension fund — “to eliminate the burden, expense, and uncertainties inherent in further litigation.” Board members are not admitting any wrongdoing under the deal.
The allegations against Marciano surfaced as the #metoo movement was gaining momentum, as a wave of women publicly accused high-powered executives on Wall Street and in Hollywood of sexual improprieties, leading to ousters and some criminal convictions.
Fabrice Benarouche, a Guess? spokesperson in Los Angeles, didn’t immediately return a call for comment Friday on the settlement.
The Employees Retirement System of Rhode Island, a Guess? shareholder, sued directors in 2022 after a string of allegations against Marciano arose involving inappropriate sexual behavior with models hired to represent the blue-jeans maker. In 2018, Upton went on Twitter — now known as X — to accuse Marciano of groping and forcibly kissing her years earlier, starting when she was a teenager.
Other models soon echoed Upton’s claims, prompting Guess? directors to launch an internal probe, according to court filings. But directors didn’t take the investigation seriously, failing to interview several accusers and producing a “shockingly brief” report that downplayed the allegations, according to the fund’s suit.
After Marciano stepped down as CEO in 2015, the board named him chief creative officer, leaving him in a position he could use to “literally force himself on one model after another,” the fund alleged in the suit.
As part of the settlement, Guess? directors must implement changes to the company’s corporate-governance policies to better address sexual-harassment allegations, according to the filings. The $22 million is slated to be paid within 10 days of approval of the settlement by Delaware Chancery Judge Lori Will, according to the filing.
Meanwhile, Guess? co-founder Maurice Marciano — Paul’s brother — announced Friday he was stepping down from the company’s board. In court filings, the company acknowledged the fund’s suit played a role in Maurice Marciano’s decision to leave the board.
It’s not the first settlement generated by the sexual-harassment allegations against Paul Marciano. In 2022, Guess? agreed to pay $1 million to resolve lawsuits filed by two unidentifed models who accused the fashion designer of abusing them.
The case is The Employees Retirement System of Rhode Island v. Marciano, 2022-0839, Delaware Chancery Court (Wilmington)
--With assistance from Michael Leonard.
(Updates with co-founder stepping down as director in 10th paragraph)
