Multichain specialty retailer L Brands announced a $90 million corporate governance reform agreement Friday to settle multiple derivative lawsuits seeking damages arising from "toxic" workplace conditions, including sexual harassment.
The global business, owner of Victoria's Secret, Bath & Body Works and PINK, said the settlement would fund governance reform efforts over five years. Formal settlement proceedings will be managed through a pending case in Ohio, but will settle derivative actions in that state, Delaware, Oregon and elsewhere.
Included in the deal is an additional $21 million for attorney fees and expenses, according to the announcement.
Victoria's Secret in particular has been targeted by a string of stockholder records demands and complaints alleging damages caused by what one Delaware records demand described as "a culture of sexual harassment and misogyny that has plagued the company and Victoria's Secret" for decades.
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The agreement will take effect when L Brands completes a spinoff of Victoria's Secret on Monday, with both continuing as separate publicly traded companies. The two companies committed to separate $45 million, five-year workplace and corporate culture reforms.
Currently, the business operates 2,684 company-operated specialty stores in the United States, Canada and Greater China, in addition to more than 700 franchised locations and online sites worldwide.
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The complaints pointed to Leslie H. Wexner, company founder and former chairman and CEO, and former chief marketing officer Edward Razek as central figures in the company's sexual harassment problems and "outdated," exploitative public image and business model.
Although Razek was mentioned as a particular target of sexual harassment claims, others also were singled out in cases that sometime ended in settlements and nondisclosure agreements.
Months before the trouble came to light, activist investor Barington Capital Group called on the company to examine close ties between L Brands' board and Wexner, as well as its failure to address changing expectations of consumers and investors regarding the treatment and depiction of women in company marketing, media and promotions.
Reform measures in the settlement include detailed requirements for sexual harassment prevention, reporting and anti-retaliation policies, along with data collection mandates.
The agreement also calls for maintenance of a diversity, equity and inclusion council and retention of a DEI consultant to assist in the effort.
The settlement agreement includes a rewording of a central corporate value statement from "inclusion makes us stronger" to "diversity, equity and inclusion make us stronger," with those values to be integrated "into every level and aspect of our business."
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Counsel for the settling shareholders include Scott + Scott Attorneys at Law for Milton Rudi and Detroit Police and Fire, and Bernstein Litowitz Berger & Grossmann LLP and Cohen Milstein Sellers & Toll PLLC for the Oregon Department of Justice and the Oregon Public Employee Retirement Fund.
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