Doug Ewert, the CEO of Tailored Brands (formerly The Mens Wearhouse) will step down from the role effective September 30, 2018. He will also step down from the board. Tailored Brands has its head office in west Houston and has a market capitalization of $1.1 billion.
The SEC filing states that Mr Ewert is retiring but then goes on to state that the Separation agreement provides Mr Ewert with severance payments and benefits ‘as if his employment were terminated by the company for no reason’.
Mr Ewert has been the CEO since June 2011 and presided over one of the worst acquisitions of the 21st century.
Back in September 2013, another retailer, Jos A Bank made an unsolicited offer to buy The Men’s Wearhouse for $2.3 billion (in cash at a 42% premium!).
After a few months of haggling, the company ended up buying Jos A Bank for $1.8 billion (in cash at a 56% premium) in June 2014, which included $1.4 billion of goodwill and intangibles. Immediately after the acquisition closed, the company stopped the steep discounting at Jos A Bank (Buy one suit, get 7 free!). Sales plunged.
In 2015 the company took an impairment charge of $1.25 billion on the acquisition. In other words, they bought a business for $1.8 billion and less than 18 months later determined it was worth only $550 million!
Mr Ewert, who has a base salary of $1.25 million, is leaving with a cash payment of $5 million (2x base & 2x target bonus, to be paid over 2 years) and a pro-rata payment of his annual bonus to be paid in 2019. He also receives accelerated vesting of stock options and units worth, by my estimate, about $4 million.
Curiously, press release also announced that the COO of Tailored Brands, Bruce Thorn, had handed in his notice on August 22, effective August 31, to pursue another opportunity. Late this evening Big Lots, based in Columbus, Ohio, announced the hire of Mr Thorn as CEO.
As a result of Mr Thorn’s unexpected departure, the company is entering into a consultancy agreement with Mr Ewert until the end of the year which will pay him $104,167 a month for the 4th quarter.
Dinesh Lathi, currently the Non-Executive Chairman of the Board has been appointed as Executive Chairman with a base salary of $1 million. The company is seeking a new CEO.