Exclusive - Men's Wearhouse founder clashed with CEO, mulls comeback
By Nadia Damouni and Siddharth Cavale
(Reuters) - Tensions started rising at Men's Wearhouse Inc over the past six months, as founder and executive chairman George Zimmer increasingly butted heads with his handpicked CEO over the clothing retailer's strategy.
CEO Doug Ewert wanted to sell the company's K&G Fashion Superstore business, while Zimmer wanted to keep it, two sources familiar with the situation said. Zimmer also objected to rising compensation for top executives, including Ewert, while the board thought it was appropriate, the sources said.
Zimmer, who is known to U.S. TV audiences for his advertising catch phrase "you're gonna like the way you look - I guarantee it," was seen by company directors to be undermining Ewert's authority, the sources said.
Last week, the Men's Wearhouse board abruptly fired Zimmer from the chairman's job, even as its share price had climbed about 50 percent in the past two-and-a-half years. The board, populated by some directors Zimmer has known for decades, told him of the decision the day they announced the firing, the sources said.
Zimmer, who was shocked by the decision, quit the board on Monday, and is now mulling his options, they added.
While Zimmer is still unclear what those options might be, an attempt to stage a comeback at the company is possible. He is talking to his advisers, including legal counsel Cooley LLP, but a decision is not imminent, the sources said.
Industry bankers and lawyers said these options could involve teaming up with private equity firms to launch a buyout bid or trying to wage a proxy battle with the help of shareholder activists or institutional investors.
"Typically a founder will not leave the company that easily as he thinks it is his baby," said Larry Cagney, a partner at law firm Debevoise & Plimpton LLP, which is not involved in the situation. Continued...