George Zimmer vs. Men's Wearhouse over firing

The clothing chain's founder and well-known TV pitchman cites 'concerns' with the board over strategy. There must be more to it.

By Jonathan Berr Jun 19, 2013 1:59PM
File photo of George Zimmer, founder and executive chairman of The Men's Wearhouse Inc., on May 1, 2012 (© Patrick Fallon/Bloomberg via Getty Images)Shares of Men's Wearhouse (MW) traded down Wednesday after the specialty retailer abruptly fired founder George Zimmer, who had been the company's TV pitchman since 1985, and postponed its annual meeting, originally scheduled for today.

Though the men's clothier was mum on the specifics behind the ouster of Zimmer, who had been the company's executive chairman, he told CNBC that he has had concerns for months about the strategy the board has undertaken. Zimmer wasn't more specific.

"Instead of fostering the kind of dialogue in the boardroom that has in part contributed to our success, the board has inappropriately chosen to silence my concerns through termination as an executive officer," CNBC quotes Zimmer as saying.

Earlier, Men's Wearhouse had said "the board expects to discuss with Mr. Zimmer the extent, if any, and terms of his ongoing relationship with the company." Again, no specifics were given.

That raises the question of why Men's Wearhouse would want to maintain a relationship with someone whom it had terminated so suddenly. One analyst CNBC quoted said Zimmer had difficulty letting go of the reins of power.

As the chain's co-founder in 1973, Zimmer remains a large stockholder, owning 1.77 million shares, according to the company's latest proxy. That raises the possibility that he'll try to mount some sort of challenge. Until today, Zimmer had a pretty sweet deal. In 2012, his compensation, which included perks such as the personal use of corporate aircraft, totaled $1.09 million.

Men's Wearhouse had the right to use Zimmer's likeness, which he had trademarked, while he was employed by the company in exchange for a $10,000 annual fee. The payoff doesn't end  there for Zimmer, who's known for the catchphrase "You are going to like the way you look -- I guarantee it."

"If Mr. Zimmer ceases to be an employee of the Company for any reason, then we would be required to pay Mr. Zimmer or his estate $250,000 per year for four years for the continued license," the proxy says.

During the most recent quarter, Men's Wearhouse reported better-than-expected results. Even with Wednesday's sell-off, the shares are up about 18% this year.

But as Zimmer has discovered, founding a company doesn't come with the ironclad job security that some people  might think, especially when it's publicly traded.

Groupon (GRPN) ousted CEO Andrew Mason earlier this year after investors decided he lacked the skills needed to run the company he'd founded. Best Buy (BBY) founder Richard Schulze was forced out of the electronics retailer last year for failing to tell his fellow board members about CEO Brian Dunn's affair with an employee. Dunn was fired, but Schulze rejoined the retailer this year as chairman emeritus.

Men's Wearhouse hasn't forgotten Zimmer quite yet. His picture is still prominently shown on the company's website, which makes the story of his ouster even stranger.

Jonathan Berr does not own shares of the listed stocks. Follow him on Twitter @jdberr.

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153Comments
Jun 19, 2013 2:19PM
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He IS the reason they sold men's clothing.. without that infamous voice and his face on the ads.. they will suffer. I bought my husbands suits there... I will no more. Good Luck Mens Wearhouse.. really BAD MOVE on your part.
Jun 19, 2013 2:43PM
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I worked there for years and George is the only one at the Corporate level that has any sense and common decency. The other "big shots" do not care about customers or the people that work there. As long as you can shove more clothes down a customers throat than he needs, then you're ok with them. Customer service will go as George goes.
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My oldest daughter worked there right after high school. George was always a great boss and he knew who all his employees were. Even though he already had stores all over the country he was very close to the action. During one of his visits to the store my daughter had taken a birthday cake in for a fellow employee. George called me personally to thank me for making the cake and to tell me how much he enjoyed it. It is those kinds of personal touches that seperated Mens Wearhouse from the run of the mill chain store. The board has just cut their own throats.  Best of luck George in what ever you turn your hand to in the future.
Jun 19, 2013 2:24PM
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That creepy, icky thing that owns Abercrombie & Fitch is the one who needs to be fired.
Jun 19, 2013 3:34PM
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Good luck with that. Zimmer was the men's Wearhouse.

Jun 19, 2013 3:08PM
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He's gonna like the amount of his settlement.

I guarantee it.
Jun 19, 2013 3:33PM
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Typical "Board of Directors" move.  Take out the person who basically IS the company.  Sounds like a bunch of jealous little punks that need to be bitch slapped.  Men's Warehouse will crumble without Zimmer.  Good luck George.
Jun 19, 2013 3:22PM
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This is a classic of why Good companies should stay Private...
Jun 19, 2013 2:46PM
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The board must be full of old farts that have no clue or young fools that do not understand the clothing business
Jun 19, 2013 3:55PM
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Bad move on their part.  George isn't just the founder, he's the FACE of the company!  I mean, if you see his face or even someone who looks like him, you think "Men's Wearhouse."  He's the kind of person who just made you believe that you should buy something from him, without resorting to the type of gimmicks, "humor", and nonsense seen in so many ads now. I'll miss his simple, straightforward commercials.
Jun 19, 2013 4:17PM
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Bad move....I bought my suits there.....I will no more....
Jun 19, 2013 2:24PM
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And let us not forget that Steve Jobs was once let go from his job at an outfit that he co-founded. It happens.

 

I've spoken with a Dallas area dude who knew George Z back in the 1980s. (I think the chain started with a store in Dallas?) He said he remembered the guy as"decent and impressive."

 

But inquiring minds want to know: What was the Board strategy that so upset Mr. Zimmer? Perhaps it wasn't so much strategy as strategery?

Jun 19, 2013 3:11PM
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Just bought a suit there and I did like the way I looked.
Jun 19, 2013 4:00PM
Jun 19, 2013 4:15PM
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George-show them who wears the pants in the family.  I guarantee they won't  like it.
Jun 19, 2013 8:38PM
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This is wrong he is The face and voice of The 'Men's Warehouse

 

 

 

 

Jun 19, 2013 2:39PM
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He's going to hate the unemployment line, I guarantee it!
Jun 19, 2013 4:15PM
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nice guy too bad that he got the ax, but y should he be any different then the rest of us who worked the best part of lives then get the boot at 27 years of hard work,  ???
Jun 19, 2013 7:23PM
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Without George Zimmer, Mens Wearhouse has no reason to exist.

Hasta la vista,  baby.

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Guess I will do my shopping somewhere else if George is out.

 

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