Gildan announced it was replacing its CEO Glenn Chamandy with Vince Tyra, effective 12 February 2024.
In the interim, the CEO role would be served by Craig Leavitt, a director of company since 2018.
“The board is confident that Vince is the right person to lead the company into the next stage of its evolution and growth. He has an extensive career as a global organisation leader with experience as an apparel industry executive, an operator, an investor and transitioning founder-led companies. Vince’s diverse professional background will provide the necessary leadership skills to propel Gildan to even greater success,” said Donald C. Berg, chairman of the board.
Gildan offered no reason for Chamandy’s exit but said it thanked him for leading the business to over $3bn in revenues.
His successor, Tyra, has held roles with Fruit of the Loom and Southfield Capital.
“I am looking forward to joining Gildan early in the new year. It is a truly iconic business with an unparalleled global reputation. I look forward to working closely with the board and the senior executive team, and all of the extremely talented employees to leverage their knowledge and expertise so that we continue maximising value for all of Gildan’s stakeholders,” he said.
But the move attracted backlash from the firm’s shareholders.
Turtle Creek Asset Management and Browning West both issued separate letters to Gildan, urging it to reconsider its decision, noting its success was due “in large part to the vision and leadership” of Chamandy.
Turtle Creek said: “Shareholders who were astute enough to purchase shares at the time of Gildan’s IPO in 1998 have been handsomely rewarded – Gildan’s share price has seen a 90-fold increase over the last 25 years.”
“During our long participation as shareholders of the company, we have been impressed by Chamandy’s stewardship of the business, his strategic vision, his extraordinary knowledge of its competitive landscape, his extensive operational capabilities, and his relationships with key stakeholders and customers.
“We were understandably dismayed by the board’s abrupt termination of Chamandy, which we believe exposes Gildan to a significant loss of leadership, loss of institutional and operational knowledge, damages employee morale and potentially threatens key customer relationships.”
It also criticised Gildan’s method of succession planning adding it is an important duty of the board and should be conducted “through a thoughtful and deliberate process, including through the engagement of the company’s existing leadership and its shareholders.”
“In contrast, the board’s abrupt termination of Chamandy, appears to have been conducted in great haste, without meaningful shareholder engagement, and without considering the substantial adverse impact on Gildan’s business.
“We strongly believe the board has made a grievous error in terminating Mr. Chamandy. We urge the board to reverse this inexplicable, ill-conceived and value-destructive decision and reappoint Mr. Chamandy as CEO of the company.”
Browning West’s letter echoed the sentiments felt by Turtle Creek, but added: “The board’s poor handling of succession and questionable judgement when it comes to its most important responsibility and decision have put Gildan’s business and shareholders at great risk.
"As described in subsequent sections of this letter, the board’s CEO search criteria and process were flawed from the outset, resulting in the appointment of a new CEO with limited manufacturing experience and a record of value destruction.”
It outlined three critical areas in which Tyra allegedly “lacked” and thus “threatened Gildan’s near- and long-term prospects.
“The Board’s CEO search criteria was flawed from the outset as it lacked a focus on best-in-class manufacturing and vertical integration experience, which is apparent in Mr. Tyra’s appointment. After studying Mr. Tyra’s background, it became clear that none of his prior executive roles involved complex global manufacturing operations comparable to those of Gildan.
“The board’s CEO search criteria does not emphasise a clear and verifiable record of value creation; It is alarming that Tyra has a track record of significant value destruction.”
Browning West alleges Tyra has “destroyed substantial shareholder value” in past executive roles at Fruit of the Loom, noting a decline in share price of 99% between 1997-2000, and Broder Brothers where net income fell from $7.3m to a $2.9m loss, as well as in his past chair role at Industrial Services of America where share price fell 77% between 2014 and 2019.
“We are alarmed at Tyra’s appointment and worry that Gildan’s shareholders may suffer similar value destruction under his leadership.”
“The Board’s CEO search criteria does not emphasise a candidate’s demonstrated ability to manage a large-scale, and increasingly global organisation, and Tyra’s most recent experience appears to be managing businesses that would be classified as “microcap” due to their small scale.”
As part of its recommendations, Browning West is demanding the reinstatement of Chamandy to the board and CEO role; the removal of Berg as chair of the board; and the appointment of Browning West co-founder Peter Lee to the board as a representative of a "significant, long-term shareholder".
It has also warned Gildan’s board that if it does not act with urgency it will consider exercising its rights as a shareholder, including requisitioning a special meeting to reconstitute the Board.
Gildan did not return requests for comment when approached by Just Style.
