Gildan Activewear‘s activist investor Browning West isn’t backing down in its proxy fight with the apparel maker, and it’s thrown down the gauntlet by alleging that Gildan is covering up the status of the company’s sale process.
Following a Monday announcement that it was refreshing the constituency of its board of directors, Browning West cofounders Usman S. Nabi and Peter M. Lee said, “[W]e believe that today’s announcement was likely triggered by the collapse of the [Gildan] Board’s reactive sale process, which it is clearly trying to bury in the 2,500+ word press release.”
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The two also said that it was time for Gildan’s board to stop is “excessive and wasteful” spending of shareholder capital on a misguided sale process and numerous tactics focused on its own entrenchment.
Gildan executives could not be reached for comment.
Gildan and Browning West have been locked in a proxy fight for control of Gildan’s board since the American Apparel owner fired former CEO and company cofounder Glenn Chamandy in December. And while Gildan even recommended the election of two of Browning West’s board slate nominees, the new board will be working not with Chamandy but with his replacement, Vincent Tyra. That doesn’t sit well with the investment firm.
The Browning West cofounders said late Monday that the current Gildan board’s list of failures includes a botched succession process, a reactive and misguided sale process and now a “desperate and defensive Board refreshment.” More importantly, from the activist’s point of view, the most “glaring omission” in the refresh was the failure to reinstate Chamandy.
“The reinstatement of Glenn has been a central and consistent demand from an unprecedented mass of shareholders, which the Board refuses to acknowledge in favor of its own interests,” Nabi and Lee said.
Browning West has been dead set against the hiring of Tyra from the start. Their belief is that he didn’t accomplish much during his tenure at Fruit of the Loom. Last week they criticized his five-pillar strategy, disclosed at an investor update, as merely a copy of the Gildan Sustainable Growth (GSG) Strategy unveiled by Chamandy in 2022.
Following the investor update, the investment firm also said that the new financial metrics Tyra and his team noted gave them some ability to reduce operating margins. Browning West has insisted that its plan has a “clear pathway” to $60 a share price by the end of 2025 and $100 over the next five years—but that future hinges on Chamandy becoming CEO again.
For that to happen, the investment firm will need the majority of shareholders at the May 28 annual meeting to vote for its slate of board nominees. It and eight other institutional investors combined control 35 percent of Gildan’s outstanding shares. Their goal is to oust Tyra and reinstate Chamandy once the new board is elected.
Chamandy for his part is ready to get back to work again.
“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 said.
On Tuesday, fellow activist Turtle Creek Asset Management Inc. called Gildan’s board refreshment a “governance charade.” The investment management firm said it couldn’t understand why incoming board members would throw their support behind Tyra when his leadership is “opposed by so many shareholders, without first engaging with the owners of the company.”
Turtle Creek, which had joined forces with Browning West and seven other institutional investors in seeking the reinstatement of Chamandy, said it intends to support each of Browning West’s nominees at upcoming shareholders meeting next month.
The article was updated to include comments from fellow activist investor Turtle Creek Asset Management Inc.
