In the months-long battle for control of Top 40 supplier Gildan (asi/56842), activist investors who back ousted co-founder/former CEO Glenn Chamandy have prevailed.
On May 23, Gildan President/CEO Vince Tyra and the sitting board of directors resigned. As they did, they announced that talks to sell Gildan have ended, and that ownership of the company will not be changing.
Glenn Chamandy, Gildan
In their place, the outgoing board members appointed eight new directors, including Chamandy, that had been proposed by Browning West, a Los Angeles-based investment firm that holds about 5% of Gildan’s outstanding shares. Browning West had been spearheading the proxy war to unseat the current board with its eight candidates and to return Chamandy as CEO.
With the Browning West-backed board in place, Chamandy’s re-ascension to the chief executive role is imminent. What for months was shaping up to be a showdown at the May 28 annual shareholder meeting, where a vote on the constitution of the board was expected, appears to have now turned into a triumphant return for Chamandy. A previous board fired him in December, sparking the bitter corporate fight
“Shareholders have made their views clear as we approach the May 28, 2024 annual meeting,” a statement from the departing board read. “The outgoing directors believe that it was in the best interests of all Gildan stakeholders for them to resign and not stand for election at the upcoming annual meeting, allowing the new board to be seated so that it can oversee the company in the most orderly and efficient manner. The outgoing directors wish the new directors, the management team, Gildan’s 45,000 employees, and its shareholders success in the future.”
“We are gratified that the current board has decided to cease its campaign activities and pave the way for an orderly and conclusive leadership transition.”Usman S. Nabi & Peter Lee, Browning West
The Browning West candidates still need to be voted in as directors at the May 28 meeting – a formality, according to analysts, as they are the only ones up for the seats. The slate of directors consists of Michael Kneeland, Chamandy, Michener Chandlee, Ghislain Houle, Mélanie Kau, Peter Lee, Karen Stuckey, and J.P. Towner. Kneeland is expected to be named chair. The Browning West-backed directors will constitute the entire board.
“We are deeply grateful for the outpouring of support that Browning West’s slate and plan have received from our fellow shareholders, Gildan employees, and leading proxy advisory firms,” said Usman S. Nabi and Peter M. Lee, principals at Browning West. “While we are disappointed that the board ignored the clear will of its shareholders for so many months and spent tens of millions of shareholder capital in an effort to defend its mistakes, we are nevertheless gratified that the current board has decided to cease its campaign activities and pave the way for an orderly and conclusive leadership transition.”
‘The Best Days Are Yet to Come’
Chamandy can’t wait to get back to work at the company he co-founded and built from a small family-run business into a multi-billion dollar, vertically integrated, global apparel manufacturing powerhouse.
“I’m extremely excited to return as Gildan’s CEO and am gratified for the incredible support I have received from both shareholders and employees over the past six months,” Chamandy said. “I’m proud of our dedicated employees for their hard work and focus through a tumultuous period. The resilience of the team and the high quality of our newly seated Board give me great confidence that Gildan’s best days are yet to come.”
Chamandy and the team have some work ahead of them. 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.
Kneeland believes better days are ahead. He and the other directors have proposed a five-pillared plan that they say, if executed correctly, could increase the company’s share price to more than $100 within five years. It was hovering around $35 early the morning of May 24.
“Gildan has an impressive 40-year history anchored by strong long-term operating results, an outstanding employee base, and a founder who has demonstrated a clear ability to oversee an increasingly global business and has an unrivaled track record of value creation,” Kneeland said. “As independent directors, we will help usher in accountability and alignment at Gildan. The interests of the Company and its stakeholders will remain relentlessly in focus under the new Board.”
In December, the then Gildan board of directors terminated Chamandy, saying he’d become a disengaged, ineffective leader who was proposing risky acquisitions while lacking the vision to grow the company organically. Chamandy and his backers kiboshed such claims as nonsense, and swiftly launched a campaign to return him as CEO, saying the board had gone rogue and was acting rashly against the wishes of shareholders.
The saga has had many twists and turns: Lawsuits slung back and forth; talk of selling Gildan, possibly to a private equity firm with Top 40 promo connections; the resignation of five board members that fired Chamandy, who replaced themselves with directors who now resigned this week; and, among things, Gildan executives publicly calling for the return of Chamandy.
Based on estimated 2022 North American promotional product revenue of $762.2 million, Gildan ranked fifth on Counselor’s most recent list of the largest suppliers in the industry.
