FREMONT, Calif. — The Men’s Wearhouse’s board of directors has offered new details regarding founder George Zimmer’s termination as executive chair.
"Our actions were not taken to hurt George Zimmer. Rather we were focused on what we believed to be in the best interests of Men's Wearhouse, as well as shareholders and employees. While Mr. Zimmer owns 3.5% of the stock, it is our obligation to represent the interests of all shareholders.”
According to the board, the conflict between it and Zimmer boiled down to issues of control. The statement presents Zimmer as a man who had difficulty accepting that he has not been the public company’s CEO for two years. The statement lists the following points of contention between the Zimmer and the board:
• Zimmer refused to support the executive team lead by CEO Doug Ewert and which includes several team members who have been running the company for many years unless they acquiesced to his demands.
• Zimmer expected veto power over significant corporate decisions. Among them was executive compensation despite the fact that the company has an independent committee of the board that sets policy in this area.
• After initially supporting the review of strategic alternatives for K&G as proposed by management and supported by the board, Zimmer reversed course. Despite Mr. Zimmer's objection, the board and management remain committed to the K&G review process.
Most notable on the board’s list of grievances against Zimmer was their assertion that he reversed his long-standing position against taking the company private by arguing for a sale of the Men's Wearhouse to an investment group. “The board believes such a transaction would not be in the best interests of our shareholders, and it would be a very risky path on many levels. It would require the company to take on a huge amount of debt to pay for such a transaction. The board strongly believes that such a transaction would be highly risky for our employees and would threaten our company culture that is so important to all of us,” the statement read.
Without Zimmer, the board is now unanimously opposed to selling the company. It states that it is committed to a strategic plan developed by Ewert and the rest of the company's management team, which the board believes “will maximize long-term value for all shareholders.”
The board added that neither its members nor management desired a total breakdown of the relationship between Zimmer and the company, but said that Zimmer left it no choice.
"We care deeply about the culture of Men's Wearhouse, which we fostered and helped create along with the management team and our 17,000 valued employees. We stand behind its core values of world-class customer service, servant leadership and the open door culture that celebrates the value of every voice. As we stated, we fully support Doug Ewert, our CEO, and senior management team who are unified and focused on the future of the company and the best interest of our shareholders, employees and customers."