Turtle Creek Asset Management, which has held shares in Gildan Activewear for a decade, is set to support Browning West’s proposed nominees in response to mounting concerns over the board's controversial decision to terminate CEO Glenn Chamandy.
Turtle Creek states it had independently reviewed the backgrounds and qualifications of each nominee disclosed by Browning West in its open letter to shareholders on 29 December 2023.
The firm believes these nominees will bring much-needed accountability, skills, experience, and a shareholder-focused perspective to the Gildan board.
Turtle Creek intends to cast its votes in favour of each nominee at the special meeting and anticipates a substantial majority of shareholders will reach a similar conclusion after conducting their respective independent reviews.
In letters addressed to the Gildan board on 14 December 2023 and 20 December 2023, Turtle Creek expressed its dissatisfaction with the board's handling of the abrupt termination of CEO Glenn Chamandy.
The decision, labelled as "reckless and ill-conceived" by Turtle Creek, not only alienated long-time shareholders but also exposed Gildan to significant risks, including a loss of essential leadership, damaged employee morale and threatened key customer relationships.
Despite a chorus of shareholder protests both publicly and privately, the board continued with what Turtle Creek describes as "stonewalling and bald-faced entrenchment tactics," prompting the Canadian firm to assert that a significant reconstitution of the board is essential.
One particularly contentious move by the board mentioned was the hasty agreement with a single shareholder, which, according to Turtle Creek, traded a board seat for voting support.
The firm explained that this move further alienated long-time shareholders and contributed to the erosion of trust.
Turtle Creek believes an expeditious special meeting is needed to allow all shareholder voices to be heard, paving the way for a reconstituted board to make important decisions for course correction.
Expressing a loss of confidence in the existing board, Turtle Creek emphasised the urgency of a swift resolution to prevent further value destruction.
The firm strongly discourages the board from engaging in further entrenchment or delay tactics, including challenging the validity of Browning West’s requisition notice or manipulating the timing of the special meeting.
Turtle Creek warns that investors across North America are closely monitoring the unfolding developments, and the firm calls upon each member of the Gildan board to carefully consider their actions on this matter.
Gildan had not responded to Just Style's request for comment at the time of going to press.
This latest update comes after Gildan reported a drop in profits in the third quarter of 2023 following lower demand and higher costs in November 2023.
