SWEAT SHOP BOARD ROOM POLITICS
Glenn Chamandy officially back at the Gildan helm after boardroom battle
The Canadian Press
Glenn Chamandy is officially back as the chief executive of Gildan after a months-long public battle over leadership of the Montreal-based clothing company he co-founded.
Chamandy was terminated last year to make way for Vince Tyra, kicking off protests by several major Gildan shareholders that disagreed with the decision.
Shareholders, led by activist investor Browning West, campaigned to have the Gildan board replaced at the company's annual meeting next week, and to have co-founder Chamandy brought back.
Browning West announced Thursday evening that its campaign was successful, as Gildan's board and new CEO stepped aside after preliminary votes showed the investor's plan was the clear favourite.
Gildan announced Friday that Chamandy is officially back in as its president and CEO, effective immediately.
The company says Michael Kneeland is now the non-executive chair of the board.
This report by The Canadian Press was first published May 24, 2024
Gildan's board resigns en masse, handing victory to activist Browning West
, Bloomberg New
GILDAN ACTIVEWEAR INC (GIL:CT)
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Gildan Activewear Inc.’s entire board of directors and Chief Executive Officer Vince Tyra quit on Thursday, conceding defeat after a bruising five-month battle with an activist shareholder over the future of the Canadian clothing maker.
The mass resignation marks a dramatic win for investment firm Browning West LP, owner of about five per cent of Gildan’s shares. It will take control of the board, install Michael Kneeland as chair and reinstate former CEO Glenn Chamandy to run the business under a new strategy.
Gildan’s board took the decision after shareholders “made their views clear” in advance of an investor meeting scheduled for May 28. Browning West said preliminary results suggested an “overwhelming majority” of shares would be voted in favour of its eight proposed directors at that meeting.
The outgoing board halted all discussions on a previously-announced sale process, Gildan said in a statement.
The company, one of the world’s largest makers of affordable T-shirts and owner of the American Apparel brand, has spent months embroiled in a toxic feud over its direction and who should be in charge. Browning West launched a campaign to eject the board in December after directors fired Chamandy and replaced him with Tyra, a former Fruit of the Loom executive and former athletic director at the University of Louisville.
Montreal-based Gildan, which was founded by Chamandy’s grandfather, has become a US$6 billion company through a strategy of manufacturing in cheap-labour countries, allowing it to become a low-cost supplier of T-shirts and other apparel to retailers such as Walmart Inc. and to printwear shops and designers.
The board had accused Chamandy of being a disengaged CEO, of stalling an agreed-upon succession plan and of wanting to pursue a risky acquisition strategy — he proposed to acquire two distributors for more than $3 billion, according to documents seen by Bloomberg News.
But shareholders, led by Browning but including other large investors such as Jarislowsky Fraser and Janus Henderson Group, rallied to Chamandy’s side and called for his reinstatement.
The very public proxy fight already prompted Gildan to overhaul its board only one month ago. On May 1, five directors stood down, with replacements appointed including former Goldman Sachs Group Inc. executive Tim Hodgson as chairman. Another two said they’d leave at the May 28 shareholder meeting.
But that wasn’t enough. In recent days, proxy advisers Institutional Shareholder Services Inc. and Glass Lewis & Co. backed Browning West. Unusually, so did a group of Gildan’s own executives, who wrote a letter to shareholders suggesting they should support Browning West’s efforts so that Chamandy could return.
In March, Browning West and Chamandy laid out plans to boost revenue, borrow more money and accelerate share buybacks to lift the stock price. Their strategy proposed that Gildan, which employs about 43,000 people worldwide, should shift more of its production to a facility in Bangladesh and away from Honduras, where energy and labor costs are higher, and focus on trying to grow in higher-end segments of the market, such as fleece products and clothing with better-quality fabric.
Their stated goal is to increase the share price to $60 by the end of next year and more than $100 in about five years. Gildan closed at $35.55 on Thursday in New York.
“Our directors are eager to begin working toward their common goal of delivering enhanced shareholder value, which begins with reinstating Glenn Chamandy as CEO,” Browning West’s Usman Nabi and Peter Lee said in a statement.
“Glenn is a visionary leader with a track record of value creation, an unparalleled knowledge of Gildan’s manufacturing business, a deep connection with the company’s employees and shareholders, and an impressive ability to foresee key industry shifts to keep Gildan one step ahead of competitors.”
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