George Zimmer, founder and ousted chairman of The Men’s Wearhouse, Inc. (NYSE:MW), is entitled to receive a total fee of $1 million for television advertising within the next four years from the company.
The company has 500 hours of advertising footage of Zimmer and there is a possibility that the company might still use him in its TV commercials. Even if the board of The Men’s Wearhouse decides not to use Zimmer in future ad campaigns within the next four years, the company still obliged to pay its former chairman.
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In November 2010, The Men’s Wearhouse, Inc. (NYSE:MW) and Zimmer signed a license agreement. Under the terms of the agreement, the company would pay Zimmer $250,000 per year within the next four years whether it uses him or not in TV commercials.
Zimmer Received One Third the Compensation of New CEO
Chris Isidore of CNNMoney reported that Zimmer received only $10,000 per year in TV ads during his tenure with the company. Zimmer had been the face of The Men’s Wearhouse, Inc. (NYSE:MW) for decades.
Zimmer received a compensation of less than $2 million per year as executive chairman of the company over the past three fiscal years, which is almost as much as the $2.1 million compensation received by CEO Douglas Ewert in the most recent year.
Paul Kranhold, spokesperson for Zimmer, acknowledges that such agreement exists, and the former chairman of the company could still appear in television advertisements. He said, “They have hundreds of hours of footage of him.” However, Kranhold said that he does not have any knowledge about the marketing plans of the specialty retailer of men’s apparel.
According to Kantar Media, The Men’s Wearhouse spent $43.9 million on advertising last year, wherein $38.2 million was spent on television commercials featuring Zimmer.
Facebook Fans Protest and Company Calls Zimmer ‘Power Hungry’
In its latest 10K filing with the Securities and Exchange Commission, The Men’s Wearhouse, Inc. (NYSE:MW) wrote, “George Zimmer has been very important to the success of the company and is the primary advertising spokesman. Although we believe we have a strong management team with relevant industry expertise, the extended loss of the services of Mr. Zimmer…[could] materially harm our business.”
The company’s page on Facebook Inc (NASDAQ:FB) received comments from hundreds of customers expressing their protests against the ouster of Zimmer.
The Men’s Wearhouse, Inc. (NYSE:MW) stated this week that Zimmer was terminated because he became power hungry. On the other hand, Zimmer countered that statement, and said the management was “more concerned with protecting their entrenched views and positions” than the interest of the company.