Ousted Men’s Wearhouse chairman George Zimmer released an open letter outlining his side of the story in the dramatic battle between the founder and board of the retailer.
Zimmer, who founded Men’s Wearhouse in 1973, stepped down as CEO in 2011. He was succeeded by Doug Ewert. Last week, the board of directors announced that the annual meeting was being postponed and Zimmer had been fired as chairman.
In its statement earlier this week, the Men’s Wearhouse board said that Zimmer had been pushing for more control of the company, and for selling it to private investors.
In his open letter, Zimmer writes, “Just one month after the directors unanimously nominated me for reelection to the board, last week they abruptly fired me from my management role and postponed the annual stockholder meeting so they could nominate a new slate of directors that excluded me. To justify their actions, they now have tried to portray me as an obstinate former CEO, determined to regain absolute control by pushing a going private transaction for my own personal benefit and ego. Nothing could be further from the truth.”
Zimmer goes on to say that he’d been encouraging the board to look at alternatives beyond just selling off the K&G business.
“To be clear,” he adds, “at this point I have not concluded that taking The Men’s Wearhouse private is a better means of preserving the unique culture and values that have made the company so successful over the years.”
The full text of Zimmer’s letter follows:
From George Zimmer
June 26, 2013
Since 1973 when I opened the first The Men’s Wearhouse store in Houston, with the help of tens of thousands of current and former employees, we have built a multi-billion dollar company based on two guiding principles. The first is to serve customers by delivering value and an enjoyable shopping experience and the second is to embody the values of servant leadership by trusting and empowering our employees to create that experience. I believed that if we did these things right, customers would be satisfied, employees would feel appreciated and motivated and shareholder value would be created. And, in fact, all this has happened.
Over the years, as CEO, I consistently encouraged the company to take a longer term approach of investing most of our profits back in the company, delivering value to our customers and building a loyal and dedicated workforce totally committed to service, rather than pursuing shorter term strategies based on financial engineering. Inside the Boardroom, we often had spirited discussions about how best to achieve these objectives. Regardless of whether the Board eventually sided with my point of view or not, I believe this dialogue and discussion led to better decisions that contributed to the success of The Men’s Wearhouse.
Unfortunately, this dynamic seems to have changed.
Just one month after the directors unanimously nominated me for reelection to the Board, last week they abruptly fired me from my management role and postponed the Annual Stockholder Meeting so they could nominate a new slate of directors that excluded me. To justify their actions, they now have tried to portray me as an obstinate former CEO, determined to regain absolute control by pushing a going private transaction for my own personal benefit and ego. Nothing could be further from the truth.
The reality is that over the past two years, and particularly over recent months, I believe that the Board and management have been eroding the principles and values that have made The Men’s Wearhouse so successful for all stakeholders.
Earlier this year, concerned with the Board’s response to the short term pressures of Wall Street, I encouraged the Board to at least study a broader range of strategic alternatives beyond simply selling the K&G division, including the possibility of a going private transaction. Rather than thoughtfully evaluating the idea or even checking the market to see what value might be created through such strategic alternatives, the Board quickly and without the assistance of financial advisors simply rejected the idea, refused to even discuss the topic or permit me to collect and present to the Board any information about its possibilities and feasibility, and instead took steps to marginalize and then silence me.
Such behavior by the Board does not strike me as consistent with sound principles of good corporate governance or the core values of The Men’s Wearhouse, but instead suggests that the directors were more concerned with protecting their entrenched views and positions than considering the full range of possibilities that might benefit our shareholders and indeed all our stakeholders.
To be clear, at this point I have not concluded that taking The Men’s Wearhouse private is a better means of preserving the unique culture and values that have made the company so successful over the years. What I do know is that as a founder and large shareholder, I am greatly concerned about the future of the company if this culture and these values are lost, and believe that the Board should be open to at least consider the full range of possibilities that could optimize the future value of the company for all stakeholders.
To the countless employees who have attempted to contact me over the past week, I appreciate your kind gestures and support. I am so very proud of the company we built together and nothing will change that. I encourage you to stay focused on serving your customers and maintaining your jobs. Please do not concern yourselves with my well-being at the risk of your own.
Zimmer was profiled by MR‘s Karen Alberg Grossman in April as a part of our Men’s Wearhouse 40th anniversary section.