Image: Victoria's Secret

L Brands announced the settlement of shareholder claims, as well as two lawsuits, that the Victoria’s Secret owner – and its various executives and directors – allowed for widespread workplace misconduct, thereby, running afoul of their duties to the company. In addition to a lawsuit initiated in L Brands- native Ohio, L Brands shareholder John Giarratano sued the company in June 2020, pointing to an “abusive and hostile work environment that was perpetuated and condoned by senior L Brands executives, including Wexner himself,” who “failed to exercise proper oversight over Victoria’s Secret, including by taking the necessary steps to prevent such misconduct from occurring in the first place and by failing to take the necessary remedial steps to ensure such misconduct did not continue in the future.” 

Fast forward a year and ahead of L Brands’ move to split Victoria’s Secret from L Brands’ Bath & Body Works brand, creating two publicly-traded entities, and amid a largescale move to overhaul the outdated Victoria’s Secret brand, the apparel group says that it has settled “all stockholder derivative claims alleging workplace misconduct at the company, including claims made in [the] derivative stockholder litigations, and in stockholder demands sent to the Board of Directors since February 2020.” 

In furtherance of the settlement, which will see both Bath & Body Works and Victoria’s Secret each invest $45 million over at least five years to fund their governance policies, L Brands says that it “has agreed to a suite of corporate governance and management measures, including the maintenance of a Diversity, Equity and Inclusion Council, the strengthening of policies and procedures for reporting and investigating sexual harassment complaints and the hiring of a DEI consultant.” 

“This global resolution, with its commitment to industry-leading governance policies, is an overwhelmingly positive result for the Company and its stockholders,” said Sarah Nash, who chaired the Special Committee of the Board that L Brands formed to investigate the stockholders’ allegations. “It further prepares both Bath & Body Works and Victoria’s Secret for success as independent public companies with strong management teams and boards of directors committed to principles of diversity, equity and inclusion.”

L Brands and Bath & Body Works CEO Andrew Meslow added in a statement, “As L Brands prepares to separate into two independent public companies, we are proud to implement these governance policies to ensure a workplace where all employees feel safe and supported and that their voices are heard.”