Gildan Activewear Inc. is taking control of the fight over its board and its constituency.
The underwear and T-shirt manufacturer made a surprising move by refreshing its board, even recommending the election of two nominees put forth by activist investor Browning West, the company said on Monday. But whether that’s all enough to avoid a proxy fight remains to be seen.
Gildan said Tim Hodgson, Lee Bird, Jane Craighead, Lynn Loewen and Les Viner were appointed to the board, effective May 1, with Hodgson becoming the independent-nonexecutive chair. The company also recommended election of Browning West nominees Karen Stuckey and J.P. Towner to the board at the Annual Meeting of Shareholders on May 28. Five other new Gildan board nominees, plus Stuckey and J.P. Towner, will also be put forward for the May board election, including Dhaval Buch, Marc Caira, Sharon Driscoll, Anne Martin-Vachon and the company’s president and CEO, Vincent J. Tyra.
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Board members Donald C. Berg, Maryse Bertrand, Shirley Cunningham, Charles Herington and Craig Leavitt will leave the board on May 1. Directors Luc Jobin and Chris Shackleton, who are on the special committee supervising the company’s sale process, will remain on the board until May 28, but will not stand for re-election.
The refreshment wasn’t exactly what activist investor Browning West wanted, which was to install an entire slate of its own board nominees at the May 28 meeting. And the inclusion of just two of its nominees might not be enough to appease the activist.
Browning West and eight other institutional investors control 35 percent of Gildan’s outstanding shares. Their aim is to reconstitute Gildan’s board, oust CEO Tyra and reinstate former CEO Glenn Chamandy once they take control of the board. Gildan’s plan clearly has no room for Chamandy, and the plan is for the new board to work with Tyra in building Gildan’s future.
Tyra last week hosted an investor update in which he identified five priorities to drive growth, with the first priority focusing on the supply chain. Browning West was first to criticize the strategy as a copy of the one launched by Chamandy in 2022.
Browning’s attacks aren’t dissuading Gildan from moving forward on company plans. On Monday, the Canadian manufacturer provided information about the refreshment process, and made it clear it wasn’t backing down from a proxy battle. It said there wasn’t unanimous support for Browning West’s nominees, even among the activist’s institutional supporters. And Gildan said that after 87 meetings with shareholders, it found that Browning West nominees were selected “without input” from other shareholders. Moreover, some shareholders expressed concerns about Chamandy returning to the company as CEO, Gildan said.
“Our slate strikes a balance between ensuring the Board retains historical continuity during a period of transition and provides fresh perspectives to ensure it continues to serve its important oversight function on behalf of all shareholders,” Gildan said, adding that Browning West should have no problem supporting the new board constituency if its goal is governance and providing the expertise required for the future success of the company.
“The refreshed Board and I fully believe in Vince and his talented team as well as Gildan’s leading market position and growth prospects,” Tim Hodgson, Gildan’s incoming chair, said. “Rest assured, I and every member of the Board and management team will continue to work tirelessly on behalf of all Gildan shareholders to ensure value is being maximized.”
Gildan said the Support Agreement it inked with Coliseum Capital Management on Dec. 17, 2023, remains in effect, and that Coliseum plans to vote in favor of Gildan’s slate of board nominees. Gildan has been accused of “backroom” dealing because the Support Agreement included Coliseum’s support of Gildan nominees this year and in 2025.
Gildan was also charged with board entrenchment, including giving Coliseum cofounder Christopher Shackelton a seat on the board in exchange for his support. Shackelton is giving up his board seat on May 28. Gildan on Monday said he has helped stabilize the company, evaluate opportunities for future growth and “ensure Gildan has the right long-term strategy and best possible Board in place.”
“Gildan is a great business with several compelling strategic paths available for continued value creation,” Shackelton said on Monday. “I am confident that the refreshed board has the right skills, commitment, and character to forge a bright future for the benefit of all shareholders.”
Separately, Gildan said there continues to be interest in its sale process, which remains ongoing, but that it doesn’t plan to make any further disclosures before the annual meeting.
Browning West executives could not be reached for comment.
