It’s never easy to fire the CEO, especially if he’s been in the big chair for many years, like George Zimmer of Men’s Wearhouse. But if you’re going to do it, you need sound reasons – and you need to say what they are. The company’s board is learning that lesson the hard way. When the board of Men’s Wearhouse released a terse statement announcing Zimmer’s departure on June 19, just hours before the company’s annual shareholders meeting, it probably hoped the matter would be quickly forgotten. But the company’s failure to offer a clear rationale for his termination left plenty of room for speculation, which was supplied in abundance by analysts, investors, commentators and new reporters.
Apparently the company grew tired of the speculation – and the drop in the share price – and it issued a lengthy statement yesterday. That in turn prompted Zimmer to fire back, with a letter accusing the board of being “more concerned with protecting their entrenched views and positions than considering the full range of possibilities that might benefit our shareholders and indeed all our stakeholders.”
The drama seems set to continue for a while, and it will certainly be a distraction for management at a time when it is dealing with a very challenging retail environment.
Once upon a time, CEOs went quietly, coasting into the sunset on a gilded barge. Not anymore. These days CEOs are likely to fire back and keep up their criticism. (Maybe it’s Hank Greenberg’s fault. The former CEO of AIG wrote the book on how to haunt the company after you’ve gone.) In Zimmer’s case, he has let it be known that he’s ready to team up with financial backers on a buyout of MW or a proxy fight to oust its board.
So what are the alternatives when the board has decided to make a change? First, consider a lengthy announcement, with a solid rationale for the move. Include a quote from the board’s lead director. Sometimes the outgoing CEO can be persuaded to offer a quote (as in the case two years ago of Bank of New York Mellon, which I discussed in an earlier post). Thaat sort of thing helps tamp down speculation.
If a statement isn’t possible, consider briefing analysts and shareholders on a conference call. That can be risky unless it’s tightly scripted, and its main purpose really should be to introduce the new CEO, not dwell on the former one.
But if neither of these approaches is possible, then consider briefing a well-regarded reporter. This isn’t pretty but it happens all the time, and it can be very effective. It’s the reason you see “sources familiar with the board’s deliberations” in news coverage. If you go this route, have your messages down cold, practice some tough questions and keep the conversation short.
Above all, avoid the minimalist statement. It might be easy to write but it won’t be the last word on the matter.