Men’s Wearhouse Inc. (MW) said the disagreements that led to the ouster of founder George Zimmer included his desire to take the company private.
Zimmer reversed a long-standing position and had been arguing for a sale of the company to an investment group, Houston-based Men’s Wearhouse said today in a statement. The founder also disagreed with a plan to seek alternatives for the K&G clothing-store chain and sought final approval on certain decisions, such as executive compensation, the retailer said.
The announcement is the company’s first public statement on the nature of the disputes that led to the firing of Zimmer, who founded the menswear retailer 40 years ago. Zimmer, 64, was ousted as executive chairman last week and resigned from the board yesterday. He still owns about 3.5 percent of Men’s Wearhouse’s shares, making him its seventh-largest investor.
“It seems like there was some real dissension on the board, so much so that the board wanted to defend their position by going public,” Richard Jaffe, a New York-based analyst at Stifel Financial Corp., said in a telephone interview. The timing is wrong to take the company private because the stock price is too high, he said. “You can’t disagree with what’s being said.”
Lindsay Andrews, a spokeswoman for George Zimmer with Sard Verbinnen & Co., didn’t immediately respond to an e-mailed request for comment.
Men’s Wearhouse rose 6.2 percent to $37.31 at 9:49 a.m. in New York. The shares have gained 13 percent this year, compared with a 10 percent gain for the Standard & Poor’s 500 Index.
The company in March said it hired investment-banking firm Jefferies & Co. to explore strategic alternatives for K&G, which sells discounted casual wear. Zimmer initially supported that plan, then reversed his position, Men’s Wearhouse said in the statement.
Zimmer also sought “veto power” over corporate decisions including compensation and refused to support the management team, led by Chief Executive Officer Doug Ewert, “unless they acquiesced to his demands,” the company said.
“Mr. Zimmer had difficulty accepting the fact that Men’s Wearhouse is a public company with an independent board of directors and that he has not been the chief executive officer for two years,” Men’s Wearhouse said.
Zimmer resigned from the board yesterday, attributing his termination to the directors’ unwillingness to address his “growing concerns with recent board decisions and the strategic direction of the company.”
The executive became known to U.S. television viewers for his commercials and signature tagline: “You’re going to like the way you look. I guarantee it.”
“It was nothing more than a disagreement of management views and styles, and he lost out,” Ivan Feinseth, chief investment officer at Tigress Financial Partners LLC, an asset manager and merger adviser in New York, said in a telephone interview. “Ideally, it would have been better for everybody if it had gone a little smoother.”
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