Browning West, which owns approximately 5.0% of the clothing manufacturer’s outstanding shares has conveyed dissatisfaction with Gildan Activewear‘s refreshed board of directors.
Usman S. Nabi and Peter M. Lee of Browning West, which is campaigning to install eight new directors and to bring back former CEO Glenn Chamandy described the board’s recent move as “reactive and misguided.”
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Gildan announced on 22 April it had refreshed its board to support its CEO Vince Tyra and Gildan’s next phase of sustainable growth.
The Canadian company said it’s board of directors refresh had been “thoughtfully constructed based on extensive shareholder engagement”.
It added the “new board will guide the company’s next phase of growth under the leadership of president and chief executive officer Vince Tyra and ensure the previously announced sale process is conducted in a manner that will benefit all shareholders of Gildan”.
Gildan explained it has appointed Timothy Hodgson, former special advisor to Governor Carney at the Bank of Canada and former CEO of Goldman Sachs Canada, Lewis L. (Lee) Bird III, former chairman and CEO of At Home Group Inc., Jane Craighead, former senior vice president of global human resources at Scotiabank, Lynn Loewen, former president of Minogue Medical Inc., and Les Viner, former managing partner of Torys LLP, as independent directors of the board, effective 1 May 2024.
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By GlobalDataThe five new directors take the seats of directors Donald C. Berg, Maryse Bertrand, Shirley Cunningham, Charles Herington, and Craig Leavitt.
Gildan pointed out the board decided that near-term board refreshment was in the best interests of the company and would facilitate a smooth transition process at what it described as an “important junction” as the new directors had “been recent observers to the board”.
However, Browning West believes the retailer’s latest manoeuvre means CEO Vince Tyra “avoids accountability” as it claims he has a record of “value destruction and poor personal judgement.”
Browning West’s Nabi and Lee alleged: “The reinstatement of Glenn as CEO has been a central and consistent demand from an unprecedented mass of shareholders, which the board refuses to acknowledge in favour of its own interests.
“It is also clear that the newly announced directors are objectively less qualified than Browning West’s director candidates, who possess best-in-class track records of value creation and relevant experience.”
Gildan had not responded to Just Style’s request for comment at the time of going to press, however the company said at the time of announcing its board of director refreshment that Browning West was “attempting to take control of the board and company without paying a premium”.
Gildan claimed it had requested to interview all of Browning West’s candidates, but that request was declined.
Gildan stated: “It was clear to the board during deliberations, through prior consideration of potential candidates for board refreshment, and feedback received from shareholders and other stakeholders of the company, that Karen Stuckey and J.P. Towner would be additive to the board as Gildan pursues its growth agenda.
“The board does not believe that the rest of Browning West’s slate offers an increase in expertise or experience to Gildan’s business, and accordingly, they do not represent the best mix of director candidates.”
Gildan’s former CEO Glenn Chamandy also commented on the board revamp and said: “When I return to Gildan as CEO, I want to be supported by the highest quality board with relevant experience. I have spent time with members of the Browning West slate and believe they possess necessary track records of value creation, expertise in successful succession planning and corporate governance, and relevant operational, industry, and ESG experience.”
He stressed the importance of a chairman with operational experience and an owner’s mindset in the boardroom, qualities he believes Mike Kneeland and Peter Lee of Browning West possess, respectively.
Browning West also claimed the board reshuffle announcement was triggered by the collapse of the board’s reactive sale process.
Nabi and Lee added: “It is time for Gildan’s Board to immediately cease its excessive and wasteful spending of shareholder capital on its misguided sale process and numerous entrenchment tactics.”
Turtle Creek intends to support Browning West nominees at Annual Meeting
Another long shareholder of Gildan Activewear, Canadian investment management firm Turtle Creek has responded to Gildan board governance change and said:
“We have been very clear in our singular desire for the Board to reverse its hasty, haphazard and value-destructive termination of Glenn Chamandy. Our meeting with CEO Vince Tyra, his public statements to date, and the Company’s most recent and bizarrely staged ‘Investor Update’ reinforced our belief that the loss of Mr Chamandy seriously impaired Gildan’s ability to drive value for shareholders.”
Turtle Creek describes the board change as”embarrassing” in the face of unprecedented shareholder opposition and believes it only proves that Gildan care about one thing only, themselves.
“Rather than facing certain defeat at the upcoming 2024 annual and special meeting of Gildan shareholders (the “Annual Meeting”), the Board has stampeded for the exits, but not before hand-picking their replacements – a collection of individuals who have already declared that they will ‘stay the course’,” said Turtle Creek.
In response to Gildan stating that “near-term board refreshment was in the best interest of Gildan” has been called “ludicrous” by the investment firm which said the board has engaged in a series of “underhanded actions” that have imposed “costs on Gildan shareholders, distracted the Company’s management team, and impaired shareholder value.”
The company added: “The board cloaked their selection of hand-picked nominees in the language of ‘governance’ and attacked the major shareholders of Gildan who opposed their actions.
“The company’s incoming Chair reaffirmed the Board’s support for CEO Vince Tyra, declaring that “[t]he refreshed board and I fully believe in Vince”, which immediately exposed this pantomime of “change” being perpetrated upon shareholders.”
Turtle Creek calls on Gildan’s board to “check their egos” and end the longstanding drama that has unfolded.
“Reinstate Mr. Chamandy and fully endorse all eight of Browning West’s nominees. Let’s turn the page on this surreal chapter in Canadian governance history and get on with the business of growing Gildan’s shareholder value.”
Background behind shareholders’ ongoing dispute with Gildan
The company faced backlash from investors, including Browning West with requests to reinstate Chamandy, which was denied by Gildan.
Gildan defended its appointment of Tyra and said its confidence in the former CEO had been “eroded gradually” after Chamandy’s plans to pursue “highly dilutive multi-billion-dollar acquisitions,” which Gildan said would sift the company away from its core manufacturing expertise.
“The board’s decision to hire a new CEO is based on our joint responsibility to see that Gildan is well positioned for future success. The business has grown in scale and complexity and the challenges and opportunities that lie ahead call for a new leader with new ideas and different skills,” Gildan said at the time.
In a separate statement published on 17 January, former CEO Chamandy was keen to defend himself and said: “It is with regret that I observe the board’s current focus on a strategy seemingly aimed at undermining my reputation and my record through insinuation and distortion of the truth.”
Browning West has remained critical of Gildan’s justification in naming Tyra as the company’s new CEO and described him previously as “an extremely poor leadership choice”.
