FREMONT, Calif., June 19, 2013 /PRNewswire/ -- The Board of Directors of Men's Wearhouse (NYSE: MW) today announced that it has terminated George Zimmer from his position as Executive Chairman. The Board expects to discuss with Mr. Zimmer the extent, if any, and terms of his ongoing relationship with the Company.
In light of Mr. Zimmer's termination, the Company also announced that it is postponing its Annual Meeting of Shareholders, which had originally been scheduled for June 19, 2013, at 11:00 a.m. Pacific daylight time. The purpose of the postponement is to re-nominate the existing slate of directors without Mr. Zimmer.
The Company expects to announce the rescheduled date, time and location of the postponed Annual Meeting shortly.....
Mr. Zimmer is the co-founder and face of Men's Wearhouse. According to available information, Zimmer was paid nearly $2 million in fiscal 2012 for his work as Executive Chairman. That title means Zimmer had been functioning as a strategic decision maker at the company. The degree to which he was truly guiding the ship isn't clear but Zimmer is relatively young at 64.
Since no other information has been released by the company as of this writing, institutional and individual investors have been left to wonder:
* Why would the company "terminate" Zimmer so unceremoniously? Even unloved CEO's are given the courtesy of being allowed to "pursue other interests" or "spend more time with family."
* What could possibly justify cancelling a shareholder meeting just hours before it was scheduled? The notion of delaying the meeting until a slate of directors can be renominated is absurd on the face of it.
* What was Mr. Zimmer's real involvement with the company? If he was truly a truly serving as Chairman there is clearly a leadership vacuum that needs to be filled immediately.
* What if any impact will Zimmer's departure have on the strategic direction of the company?
With the facts at hand there isn't a reasonable way to factor this leadership change into the valuation of the company. Said more plainly, at this point no one can possibly know what Men's Wearhouse is worth relative to where it closed last night, before Mr. Zimmer's termination.
Yet there are people buying the stock in massive size. Trading volume was greater than four times average by 1PM Eastern time. There are investors jumping in to buy the dip. Either buyers of MW shares are investing blind or they know more than what is contained in the press release. The playing field isn't level.
The answer is to halt the stock. Shares of Men's Wearhouse shouldn't be trading until the company can provide more information. Anything so urgent that it could cause them to cancel a shareholder meeting is important enough to justify shutting down trading until the company can get its act together and tell investors what they need to know.