30 November 2014

The Founder Plots a Coup ... that Backfires

Earlier this year, George Zimmer, the very public founder of Men's Warehouse, didn't like the way he looked, as he was unceremoniously terminated from his executive chairman of the board role with The Men's Warehouse.  Even Saturday Night Live found this termination newsworthy enough to parody him on one of its broadcasts.
Back in 2011 Zimmer was replaced by Doug Ewert, who then took on the role as CEO. His recent firing coincided with the company's acquisition of Maryland-based Jos. A Bank, after a back and forth battle over who would acquire whom.
Mr. Zimmer stayed on as executive director post this transition.  However, apparently he had difficulty accepting that he was no longer CEO. We know little about George's behavior prior to his termination from his role as a director.  However, from the reports of this event, we guess that he was not of much help to his successor.
According to the Board's written statement at the time of his termination, Zimmer refused to support the management team.  He demanded power to veto corporate decisions, including executive compensation.  In fact, some insiders have said that Zimmer tried to negotiate a sale of the company to a private equity group.  Zimmer shot back that they used this firing to silence his concerns.
Either way, this very public controversy reminds us that the role of the founder post termination is of critical importance to on-going corporate governance.  Simply changing titles without decisive agreement on roles and responsibilities is critical to the successor's function.  Couldn't The Men's Warehouse have done a better job for its management team by insulating them earlier from his divisive behavior?