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News May 20, 2024

As Shareholder Meeting Nears, Some Gildan Executives Call for Glenn Chamandy’s Return

A corporate war for control of the publicly traded Top 40 supplier is set for a dramatic conclusion next week.

By  Christopher Ruvo

A bitter, months-long proxy fight for control of multi-billion-dollar Top 40 supplier Gildan (asi/56842) is poised to come to a head on May 28 with shareholders set to decide the future leadership of the publicly traded company.

And now, with the vote just days away, activist investors looking to overhaul the current board of directors have seen their campaign bolstered by several executives at Gildan who penned a letter that calls for the return of ousted co-founder/former CEO Glenn Chamandy and the approval of new board members proposed by investment firm Browning West.

“We firmly believe that reinstating Glenn as CEO is vital for Gildan’s success,” the letter said.

empty boardroom

Bloomberg Media was the first to report on the letter. The Gildan executives spoke with the media outlet on condition of anonymity, saying to reveal their identities could jeopardize their jobs. The letter writers are at the vice president level or higher, according to Bloomberg.

The battle over Gildan began in December when the board fired Chamandy and replaced him with new CEO Vince Tyra.

Activist investors led by Browning West, a Los Angeles-based investment firm that controls about 5% of Gildan’s outstanding shares, have been campaigning to have shareholders vote eight new board members into place at the May 28 annual shareholders’ meeting. Those directors, if elected, would return Chamandy as CEO. Chamandy is one of the eight proposed directors under the plan.

In their letter, the Gildan executives backing Chamandy’s return asserted that the board that fired the CEO misinformed the public when they characterized him as a disengaged, ineffectual leader lacking in the vision necessary to propel the company forward. To the contrary, Chamandy is a committed leader with an in-depth knowledge of Gildan’s global operations, the executives said.

“His deep understanding of Gildan’s processes and operations is unparalleled,” their letter stated. “Claims of absenteeism are misleading. Glenn has always been engaged with the executive team and committed to driving our company’s success.”

At least two proxy advisory firms, Glass, Lewis & Co. and Institutional Shareholder Services Inc., have in recent days called for supporting Browning West’s slate of eight board candidates.

“We appreciate the ringing endorsement both leading independent proxy advisory firms have given,” Usman S. Nabi and Peter M. Lee, principals at Browning West, said in a statement. “In their reports, both ISS and Glass Lewis rebuke the current board and determine that it erred in terminating proven value creator Glenn Chamandy, which serves as a conclusive and independent validation of the arguments that we and many other shareholders have voiced since last December.”

Regarding the letter from select executives supporting Chamandy, a spokesperson for Gildan said: “As we approach the shareholder voting deadline, Gildan wants employees to vote their shares at their discretion and not feel pressured to take a public position in this contest. The e-mail behind this letter, urging employees to take a position, is an example of recent behaviors during this proxy contest.”

The current Gildan board includes five directors whose tenures started May 1 after former directors that made the decision to fire Chamandy, including previous chair Donald Berg, resigned. Those new board members must have their seats affirmed by shareholders at the May 28 meeting if they want to remain in the positions. None of those directors is recommended by Browning West.

Gildan’s board released a presentation recently on why the five newly appointed directors, along with some incumbents and two independent directors that Browning West suggests, should be on the board.

“All [have] the necessary experience, expertise and skills needed to maximize Gildan’s full potential and mitigate further disruption,” a statement said. “The newly constituted board is the result of a thorough, deliberate process that was rooted in extensive shareholder engagement.” Tyra has also outlined strategic priorities for driving Gildan’s growth.

Meanwhile, Browning West has released a presentation on why shareholders should back its candidates.

“Our entire eight-member slate has collaborated to design a superior operating plan that will nearly double [Gildan’s] stock by 2025 and triple it in five years,” the Browning West presentation said. “Our slate has best-in-class apparel expertise, succession expertise, and governance experience; Mr. Chamandy needs to be supported by our entire slate to deliver our superior plan because it requires the contribution of all eight directors on our slate.”

Headquartered in Montreal, Gildan reported that total global full-year sales across all its business divisions – more than just promo – fell 1.4% year over year in 2023 to about $3.19 billion. Sales and earnings declined in the first quarter of 2024.

Based on estimated 2022 North American promo product revenue of $762.2 million, Gildan ranked fifth on Counselor’s most recent list of the largest suppliers in the industry.