Browning West is giving the impression that it wants to take the high road in its Gildan Activewear Inc. board battle.
The investment firm on Wednesday said it will nominate its slate of board nominees at the company’s annual meeting of shareholders on May 28. It initially sought a special meeting to be hold sooner to reconstitute the board.
Browning West said that a special meeting would have required a vote to remove the board and an election of directors. Because all eight sitting directors have terms that will expire, it would be easier just to have shareholders vote on the election of candidates to the board. It’s also hoping that shareholders take the easy route and elect its entire slate of eight board nominees.
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Gildan also said Monday that it planned to seek legal action in a Canadian court to address certain U.S. antitrust violations that it affected Browning West’s ability to acquire shares and request the special meeting of shareholders to reconstitute the board. Browning West has said that the U.S. regulatory question “is entirely irrelevant to our valid requisition under Canadian law.”
While the investment firm had a change of heart on tactics, it didn’t mince words in explaining that the move was to “simplify the voting process” and “mitigate the Board’s self-serving and wasteful legal tactics.”
“Unlike the current Board, we are focused on preserving value by minimizing the absurd level of shareholder funds being wasted to aggressively attack the company’s largest owners,” Browning West said.
“Now that we have pivoted, the Board can no longer use the excuse of its wasteful court process to delay the annual meeting, which should immediately be moved forward to early May to align with recent years’ scheduling,” the investment firm’s cofounders Usman S. Nabi and Peter M. Lee said. The two also warned the board to avoid self-directed actions or maneuvers to insulate insiders from accountability. “In our view, the Board has completely forfeited its right to make material decisions between now and the Annual Meeting,” they concluded.
The removal of Glenn Chamandy as CEO in December led to the current brouhaha, as well as battle of words between Gildan and its activist investors. Browning West is joined by eight other investors—Turtle Creek Asset Management, Jarislowsky Fraser Ltd., Cooke & Bieler LP, Pzena Investment Management, LLC, Janus Henderson, Anson Funds Management LP and Anson Advisors Inc., Oakcliff Capital and Cardinal Capital Management—seeking board change and the reinstatement of Chamandy as CEO. The investors together control 35 percent of Gildan’s outstanding shares.
And while Browning West is the most vocal of the investor group, others have weighed in too. The hedge fund Turtle Creek last week rebuked the Gildan board, telling its members that they “have a legal and moral responsibility to act as independent fiduciaries for shareholders, even when those shareholders disagree with you and seek to have you replaced.”
