Browning West has no intention of backing down in its proxy quest for a full reconstitution of the Gildan Activewear board.
On Wednesday, the activist investor refuted Gildan’s claims that Browning West rebuffed “good faith efforts” by the company to reach a settlement.
“We have attempted to have settlement discussions with the Board, but these discussions were fruitless given that the Board consistently refused to consider any mutual resolution that would include the reinstatement of [former CEO and Gildan co-founder Glenn] Chamandy as CEO,” Browning West said in an April 29 letter to fellow Gildan shareholders.
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The activist investor on Wednesday filed materials connected to its board fight and is urging that Gildan Activewear shareholders to vote for its Gold Proxy Card at the company’s shareholders’ meeting on May 28.
“The core issue in this proxy contest is leadership,” Browning West said in its April 29 letter. The institutional investor went on to note that the Gildan board in December 2023 “plunged Gildan into chaos by abruptly terminating high-performing and long-standing CEO Glenn Chamandy,” and replaced him with Vince Tyra. The activist has consistently attacked Tyra as a less qualified executive. Browning based its conclusion on its opinion of Tyra’s track record at Gildan competitors Fruit of the Loom and Broder Bros., as well as its perception that Tyra lacks critical manufacturing experience. Broder is currently a customer of Gildan’s, Browning noted.
According to Browning West, one key difference between the two is that Chamandy grew Gildan to its current scale of over 40,000 employees and a market capitalization of $6 billion. In contrast, Tyra has not held a CEO role for nearly 10 years, and has never been a public company CEO. The investor also charged that his experience has been “only with subscale companies.”
But its attack isn’t just against Tyra, but Gildan’s board as well. It even said the company’s board “wasted millions of shareholders’ money” in maneuvers aimed at board retrenchment.
Gildan on April 22 disclosed a board refresh that included the immediate departure of five board members, with two staying on until May 28. The two—Luc Jobin and Chris Shackleton—are not standing for re-election. Gildan recommended that shareholders vote for the five new members who joined the board, and the two Browning West nominees—Karen Stuckey and J.P. Towner—to take over the seats vacated by the soon-to-be departing board members.
But Shackleton’s board membership also wasn’t without controversy, as his joining the board was charged by activist investor Anson Funds Management as a “backroom deal” with Shackleton’s Coliseum Capital Management. The charge was that he received a board seat on Gildan in exchange for Coliseum’s support—what activists believe as a board entrenchment maneuver—of Gildan’s full slate of board nominees at each of its 2024 and 2025 Annual Meeting of Shareholders. Anson is one of eight other institutional investors that are in support of Browning West’s push for board change. The investors together control 35 percent of Gildan’s oustanding shares.
Browning West’s spin is that the Gildan board’s weakness was evident through the resignation of five directors, which included board chairman Donald Berg and the chair of every board committee, and by the two incumbents who chose to “avoid accountability by not standing for re-election.”
“These seven resignations clearly serve as a final acknowledgment of the Board’s many significant failures,” the investor wrote. It also emphasized its position that voting for its slate of board nominees and the reinstatement of Chamandy could result in an operating plan that can “nearly double Gildan’s share price by the end of 2025 and nearly triple it within the next five years.”
Browning West is forecasting potential revenue growth under its board slate’s operating plan of revenue growth at 6 percent on a compound annual growth rate, along with a stock price over $60 by the end of 2025 and over $100 by the end of 2028.
The investor also fought back on Gildan’s attack last week of its track record as an activist. It cited past board positions that included Six Flags and Tempur+Sealy and the annualized total return improvement after it intervened in those investments.
While it is no surprise that both sides’ proxy filings are a rehash and even doubling-down of their respective positions, it could be that Gildan’s next quarterly report may provide some indication of how it is doing since Chamandy’s departure in December, as well as an updated forecast on the company’s current trajectory.
Gildan is set to post first-quarter results on Wednesday after the equity markets close the day’s trading session.
