George Zimmer plots a comeback at Men's Wearhouse
It could be war between the founder and the board as both sides stake out their positions. Wall Street senses a takeover battle.
Zimmer is said to be consulting his advisers, including legal counsel, but his options are limited. Zimmer's family owns a 4.7% stake in the retailer, and the former executive chairman himself holds 3.5%. That position isn't large enough to enable Zimmer to force the company to do his bidding. But the baritone pitchman may able to join forces with a larger partner such as a private equity player to buy the company. That's how how tech entrepreneur Michael Dell is planning to take Dell (DELL) private.
Not surprisingly, Wall Street senses a potential takeover battle. Shares of Men's Wearhouse, which has 1,143 stores, were up $1.97, or 5.6%, to $37.10 in early trading Tuesday.
The chain, which has been pummeled on social media since ousting Zimmer, also tried to explain the reasons for the abrupt dismissal. According to a company statement, Zimmer had difficulty releasing the reins of power and had been undermining the authority of CEO Doug Ewert. Zimmer also balked at the company's plans to sell its underperforming K&G stores and failed to persuade the board to sell the chain to a private equity investor.
The men's clothier said it didn't want to part ways with Zimmer and tried to accommodate him. But it said Zimmer wouldn't settle for "anything other than full control of the company," which the board couldn't accept. The company said that left the board with "no choice but to terminate him."
Zimmer, Men's Wearhouse's TV pitchman since 1985, was well-paid for someone who wasn't involved in the company's day-to-day management. His 2012 compensation was $1.09 million and included perks such as personal use of corporate aircraft. If Men's Wearhouse decides to keep using Zimmer and his famous tagline -- "You are going to like the way you look. I guarantee it" -- he's entitled to $250,000 now that he's no longer a Men's Wearhouse employee.
Jonathan Berr doesn't own shares of the listed stocks. Follow him on Twitter @jdberr.
A little over a million salary seems sort of low for the face of a major chain and founder. I understand he has stock, but I figured he would have been in the 3-10M a year salary range.
" I guarantee it" -- he's entitled to $250,000 now that he's no longer a Men's Wearhouse employee."
Wow what a rip-off...
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The company plans to close stores and lay off employees, and says it needs to make some deeper changes.
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