Under fire casualwear giant Gildan Activewear has written to shareholders, urging them to back the current board’s strategic position. In a letter that alleges ex-company CEO Glenn Chamandy “put his personal interests ahead of the company’s”, Gildan has asked shareholders to vote on the Blue proxy card “for all” of its qualified and experienced Director nominees.
The board has also recommended that shareholders vote for the elections of Karen Stuckey and J.P. Towner, who have been nominated by a shareholder, Browning West, as they would be “additive to the Board as Gildan pursues its growth agenda”.
“These Board changes were recommended by our Corporate Governance and Social Responsibility Committee after extensive conversations with Gildan’s shareholders,” Gildan said in the letter. “One of the consistent themes we heard during those conversations was the need for more apparel expertise and experience with value-oriented consumer products on the board.
“That is why we are also recommending that you vote for two of the nominees on the dissident slate, Karen Stuckey and J.P. Towner. While Browning West continually rebuffed our request to interview their candidates, it was clear to the board, both through prior consideration of potential candidates and feedback received from shareholders and other stakeholders of the company, that Karen Stuckey and J.P. Towner would be additive to our board as Gildan pursues its growth agenda.”
Gildan Activewear shareholder Browning West, which holds approximately 5% of the company’s outstanding shares, has filed a lawsuit against the activewear giant to ensure the rights of shareholders are preserved at May’s annual meeting of shareholders.
The lawsuit, filed at the Superior Court of Quebec – Commercial Division against Gildan and the company’s board of directors, is the latest stage of the shareholder revolt that has engulfed Gildan since the late-2023 sacking of chief executive officer Glenn Chamandy.
Chamandy was removed after opposing the board’s succession plans for him, with the board also reportedly uncomfortable with Chamandy’s acquisition-driven growth plans.
Since then, Chamandy and Gildan have published different accounts of terms of his dismissal. Gildan claims that the exit relates to a three-year old succession plan agreement while Chamandy has alleged he was terminated without cause. The subsequent shareholder revolt has seen Browning West publicly criticise the embattled board, highlighting Chamandy’s long-term track record and the performance of Gildan shares.
Gildan said it had attempted to reach a settlement agreement with Browning West over the last several months, and that it had offered multiple times to interview its candidates so that the Board could consider those candidates for nomination at the 2024 Annual Meeting. “Good faith efforts by the company were repeatedly rebuffed by the activist hedge fund,” the letter continued.
“There was a case for change at Gildan in 2023, and the board delivered the necessary change by appointing Vince Tyra as Gildan’s President and CEO.
“By moving to replace Chamandy with Tyra as Gildan’s president and CEO and overseeing the evolution of Gildan’s Sustainable Growth Strategy, Gildan made the necessary change to ensure that the company is well positioned for the future.
“Let us be clear, the decision to transition leadership away from the Founder CEO was not taken lightly. While we acknowledge the contributions made by Glenn Chamandy during his 20-year tenure as CEO, it became evident to the board that a change was necessary to allow Gildan to reach its full potential.
“The board was unanimous in its conviction that retaining Chamandy as CEO would have jeopardised the future of Gildan and destroyed significant shareholder value.
“As Chamandy was putting his personal interests ahead of the company’s, the business was losing momentum and growth was stagnating.”
