A regulatory filing released this morning by Eminence Capital reveals that the activist firm is ratcheting up the pressure on The Men’s Wearhouse, Inc. (NYSE:MW). The filing with the Securities and Exchange Commission indicates that Eminence Capital is going to attempt to change the voting rules at the company. A supporting press release filed with the 13D states the firm’s disappointment that Jos. A. Bank Clothiers Inc (NASDAQ:JOSB) canceled its bid for Men’s Wearhouse.
Eminence Capital takes next steps against Men’s Wearhouse
Today’s SEC filing states that Eminence is trying to call a special meeting of shareholders. The firm holds 9.8% of The Men’s Wearhouse, Inc. (NYSE:MW)’s shares, which makes it the retail chain’s single biggest shareholder. Texas state laws say those who hold at least 10% of a company’s shares can call a special meeting, so this is a request at this point. If Eminence is successful in getting a special meeting, the firm will request votes on a few topics.
The firm wants to change the company’s bylaws to allow for a majority voting standard rather than a two-third voting standard, which the board recently imposed. Eminence also wants to make it possible for shareholders to remove directors from the retail chain’s board without cause and elect new ones at a special meeting.
Why Eminence Capital wants to do this
In the firm’s press release, it provides more details on its motivations behind pushing for these changes. Eminence was especially disappointed that the board at The Men’s Wearhouse, Inc. (NYSE:MW) did not enter into discussions about a merger with Jos. A. Bank Clothiers Inc (NASDAQ:JOSB), which canceled its bid today. The deadline was yesterday, and according to Eminence Capital, the board’s decision to let the offer expire means that “it is not committed to exercising its basic fiduciary duties to shareholders and is satisfied with the status quo.”
The firm doesn’t believe that the recent actions taken by the retail chain’s board are in shareholders’ best interests. In addition to tightening the voting rules to require a two-thirds majority, The Men’s Wearhouse, Inc. (NYSE:MW) recently adopted a poison pill to hold shareholders to no more than a 10% stake in the company. According to Eminence, these two actions indicate that the board has “a troubling mindset” in terms of the rights of shareholders.
Eminence said it continues to urge the retail chain to explore more strategic options, including a potential merger with Jos. A. Bank. The firm also said that if it is unable to push through a positive result, then its amendments to the company’s bylaws will provide them with the tools to hold “the board accountable for its failed leadership.”