Who to believe?
The battle for board control at Gildan Activewear following the ouster of former CEO Glenn Chamandy is getting nastier as each side spins its own tale of woe.
The Hanesbrand rival on Tuesday disclosed further details about Chamandy’s alleged conduct prior to his removal. It said the actions are the reasons why the company’s board has said previously that it “gradually lost trust and confidence” in the former CEO. The information came to light after a review of Chamandy’s electronic files following his departure. “Mr. Chamandy’s actions and lack of transparency with the board are further indications that new leadership was required at Gildan,” the company said.
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Chamandy’s replacement as CEO is Vince Tyra, who began his new job on Monday, one month earlier than planned. The firing of Chamandy in December and the naming of Tyra as his replacement started a brouhaha over who is best qualified to lead the company, which has led to what is essentially a battle for control of Gildan’s board.
Gildan’s board previously attacked ex-CEO Chamandy for his “false narrative.” Now the company said the new information includes at least one undisclosed relationship between Chamandy and a shareholder, and that the “company is looking into others.”
Gildan previously said Chamandy’s attention while holding office was focused more on personal pursuits, including the development of a luxury golf resort in Barbados. On Tuesday, the activewear firm charged that Chamandy failed to disclosed he had invested in funds managed by an unnamed Gildan shareholder. Gildan said that shareholder is now supporting Chamandy’s reinstatement. The company also stated that a senior executive of that shareholder “also purchased a multi-million-dollar property at Apes Hill, the private golf resort in Barbados owned by Mr. Chamandy.”
Activist investor Browning West is seeking a special shareholders’ meeting to install a new board at Gildan. The American Apparel owner said Wednesday that Chamandy seems to have a “close relationship” with the hedge fund. It noted that Chamandy was invited to be a guest speaker at the hedge fund’s investor day in February and charged that the investor seems to have been treated differently than other shareholders. One example cited was an exclusive tour of the activewear firm’s Honduras manufacturing plant specifically for Browning West cofounders and a number of the hedge fund’s investors.
“The company has no record in recent history of any other Gildan shareholder and their own investors being hosted by the CEO to an exclusive visit to a Gildan facility,” the company said. It also charged that the hedge fund was provided with a “vastly different view of the potential future value of Gildan’s share price than what Mr. Chamandy told the board.”
“The Board’s increasingly desperate messages in the face of unprecedented shareholder backlash are failing to divert attention away from substantive shareholder concerns and Browning West’s requisitioned special meeting,” a Browning West spokesman said on Wednesday.
Spinning a more positive light to the Gildan board’s “close relationship” charge, the Browning West spokesman said the “highlighting” of the hedge fund’s “rigorous diligence” that included site visits gave the hedge fund an understanding of the “operational complexity of Gildan’s manufacturing process.” That understanding led Browning West to conclude that Tyra is not the right person for the CEO job. “It has likely become clear to all shareholders that the Board is much more focused on self-preservation than accepting shareholders’ views and creating value,” the spokesman said.
“It is with regret that I observe the board’s current focus on a strategy seemingly aimed at undermining my reputation and my record through insinuation and distortion of the truth,” Chamandy said on Wednesday. He said the board’s latest statement “continues to reflect an approach that is misguided, misleading, and value-destructive, prioritizing the obsession of board members with their own reputations above all else.”
According to Chamandy, the Gildan board needs to “refocus its efforts and priorities toward recovering the loss of value for which it is responsible—and listening to shareholders, a goal that benefits all stakeholders. This must be done forthwith to avoid further detriment to Gildan.”
So why the tit-for-tat? Browning West is joined by other institutional investors who together own 35 percent of Gildan’s outstanding shares. It is leading the charge to remove board chair Donald Berg and seven incumbent directors with nominees of its own, including Browning West cofounder Peter Lee. Gildan’s board has called Browning West’s campaign “misguided.” Each side is hoping to get the attention of the other 65 percent of shareholders to support its position.
Separately, the Gildan board said it will respond to the request for the special meeting “in due course.” It also noted that Browning West’s claim that it intends to hold the Annual General Meeting of Shareholders as late as Fall 2024 is “false.”
