Gilden Activewear Inc. on Monday disclosed that it hired a leading corporate governance expert following the firing of former CEO and co-founder Glenn Chamandy.
The expert, Dr. Richard LeBlanc, evaluated Gildan‘s CEO succession planning process. According to Gildan, LeBlanc’s report concluded that the company’s board took a series of “reasonable steps” that would be expected of a Canadian public company board.
One of the key findings in LeBlanc’s report included the following: “Based on my review, it is my opinion that the Board acted in a manner consistent with prevailing standards of corporate governance for CEO succession planning, and the duties and obligations owed by directors to Gildan, during the time from May 2021 to the letter of termination of the former CEO, dated Dec. 10, 2023.”
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Another finding from LeBlanc noted that based on the “documents and statements of facts provided to me, I have formed the opinion that the board of directors of Gildan Activewear followed a good and rigorous process with respect to succession planning for the president and chief executive officer.”
Those disclosures were made in a company presentation to shareholders ahead of the May 28 Annual Shareholders’ Meeting, in which activist investor Browning West and eight other institutional investors are hoping to install their slate of nominees to the board. Their aim is to reinstall Chamandy after firing his successor, Vince Tyra.
While Gildan reiterated most of the claims already noted before in its “war of words” with Browning West, the American Apparel owner did state that the concerns over Chamandy’s “formal, multi-billion strategy proposal” regarding an acquisition was due in part to how past acquisitions by Chamandy “resulted in major write-offs,” according to a company statement.
That statement also pointed out that, in Gildan’s opinion, Browning West’s focus is on increasing leverage to fund dividends and share buybacks for short-term gains, and has no new ideas to strengthen Gilden’s operations for long-term growth. And Gildan charged that the activist is “solely focused on taking control of Gildan without paying a premium.”
Browning West has said its operating plan, formulated by Chamandy, could provide a more robust growth trajectory, as well as a stock price. But Gildan called the Browning West plan “unrealistic” marketing that was fueled by improbably operating projections. The underwear and tees manufacturer stuck to its position that the long-term plan it has in place is more “actionable [and] realistic.”
Gildan also reiterated that its newly reconstituted board negates the need for another update to its board composition, mostly because the new board already took into account objectives that shareholders said they want—namely, holding the CEO accountable and objectively measure performance, and for all directors to work together constructively.
Gildan, which posted first-quarter earnings earlier this month, said legal and advisory fees connected to the proxy fight during the period ended March 31 hit $15.4 million. Adding in the $1.7 million in costs during the fourth quarter, the total spent thus far hits $17.1 million.
While Gildan was first out the gate with its presentation asking shareholders to vote for its Blue Card, Browning West followed with its presentation, telling investors how to vote on the Gold Card for its board nominees.
Most of the activist’s points have been made before, but this time were consolidated into a single presentation that shareholders can view under one file. And as in earlier pitches to garner investor support, the perceived negatives about Tyra’s leadership at firms unconnected to Gildan were contrasted against Chamandy’s past performance and leadership at the company he co-founded.
But Browning West also charged that Tyra’s continued tenure could result in management turnover as it did when he was at Broder Bros., as well as an allegation that there was a misrepresentation of his “previous titles at Fruit of the Loom and Broder Bros.” At Fruit of the Loom, Gildan’s closest competitor, Browning West noted that Tyra was not president of the company, but was president of retail and activewear, which the activist described as divisional roles.
And as for Gildan’s nod to LeBlanc’s conclusion that there was no corporate governance issue, the activist charged that the former directors “hired paid consultants to rubber stamp governance and succession process after the fact.”
