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Zimmer, You Might Not Like the Way This Looks

Wednesday, 19 Jun 2013 | 2:17 PM ET
Men's Wearhouse Ousts Founder
Wednesday, 19 Jun 2013 | 10:13 AM ET
No reason has been given yet for the departure of founder and executive chairman George Zimmer, reports CNBC's Courtney Reagan. Zimmer has long been the face of the company.

Men's Wearhouse founder George Zimmer doesn't like this way this looks.

The annual shareholder meeting, scheduled for Wednesday, has been postponed because Zimmer, who served as the company's executive chairman, has been terminated.

You may not realize it right away, but if you have a TV, you know Zimmer. He's the "guarantee" guy. You know the line, "You're going to like the way you look, I guarantee it."

While the company did not give a reason for the termination, and has no additional comment for CNBC, Zimmer himself has something to say. In a statement to CNBC, Zimmer said:

"Over the last 40 years, I have built MW into a multi-billion dollar company with amazing employees and loyal customers who value the products and service they receive at MW. Over the past several months I have expressed my concerns to the Board about the direction the company is currently heading. Instead of fostering the kind of dialogue in the Boardroom that has in part contributed to our success, the Board has inappropriately chosen to silence my concerns through termination as an executive officer."

Before Zimmer issued the statement, Stifel analyst Richard Jaffe sent a note to clients saying he expected the reason behind the termination was probably that "Zimmer had difficulty letting go of the reins and leadership of the business," which Zimmer's statement somewhat implies.

(Read More: Men's Wearhouse Fires Founder; He Fires Back)

Source: Men's Wearhouse

It seems Zimmer wanted to remain influential in the company's path forward, and letting go of a company he founded certainly couldn't be easy after 40 years.

Zimmer once sold raincoats out of the trunk of his car, and is now the face of a brand that has 40 percent market share in U.S. tuxedo rentals and around 28 percent market share in men's tailored clothing, according to industry estimates.

Although the founder's influence has been scaled back recently, some think it would take a drastic move, at a significant time like a shareholder meeting, for the board to finally cut ties.

It couldn't have been easy, the board isn't exactly 100 percent independent. Zimmer built his board over time, to a group composed—at least until recently—of his allies.

One board member, best-selling author and physician Deepak Chopra, issued a statement expressing his support for CEO Doug Ewert and the company's management team. "As a member of the board of the Men's Wearhouse, I am very excited about the future of the company," he said.

Ending ties with Zimmer won't be very easy. He is the company's largest individual shareholder with a 3.5 percent stake.

And since his likeness is so connected to the company, Men's Wearhouse has to pay for its use even in the event of a termination. According to SEC filings, Men's Wearhouse is required to pay Zimmer or his estate $250,000 per year for four years for the continued license. Once those four years are up, it will have the option to continue to license and subsequent payments for its use.

However, Jaffe said that the company has been evaluating the effectiveness of Zimmer in his brand messaging, concerned it may not be resonating with the ever-important millennial consumer.

Jaffe is one of six analysts who cover Men's Wearhouse, and he has reiterated his "buy" rating on the stock. Men's Warehouse shares did open lower on the news Wednesday, but the stock eventually retraced some of its early losses.

In a press release, Men's Wearhouse said, "the board expects to discuss with Mr. Zimmer the extent, if any, and terms of his ongoing relationship with the company."

Ouch.

—By CNBC's Courtney Reagan. Follow her on Twitter @CourtReagan.

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