Days after Gildan Activewear Inc. shocked the market by announcing it was parting ways with long-time chief executive Glenn Chamandy, one of the company’s largest shareholders, investment firm Browning West, launched an activist campaign to bring him back. Jon Feldman, a partner at Goodmans who heads the law firm’s shareholder-activism practice, represented Browning West in that fight. Below, he reflects on the saga with Globe reporter Robyn Doolittle.
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UP TOP
Travel disruptions ahead in wake of deal ending WestJet strike
Travellers will face more flight disruptions this week after WestJet reached a deal with its striking mechanics.
The company said 130 planes were grounded at 13 airports across Canada in response to the strike, which had disrupted the travel plans of tens of thousands of travellers on the Canada Day long weekend.
With a deal in place with its 680 unionized mechanics, the airline said it will bring planes back into operation “in a safe and timely manner.”
“Given the significant impact to WestJet’s network over the past few days, returning to business-as-usual flying will take time and further disruptions over the coming week are to be anticipated as the airline gets aircraft and crew back into position,” the company said in a statement.
Spotlight
Lessons from a months-long proxy fight
Jon Feldman, a partner at Goodmans LLP, at the firm's offices in Toronto.Cole Burston/The Globe and Mail
Robyn Doolitle speaks with Goodmans LLP lawyer Jon Feldman.
As proxy fights go, have you ever worked on something as dramatic as Gildan?
This one stands alone. There’s always high drama with this type of stuff, but in most cases, the parties are able to find a way to get to the negotiating table and work out a settlement. This one was so different because both sides were very determined that their view was right. The other thing that was a little bit unusual is it’s not very typical to go for control of a board. It’s more common, for example, if the investor just wants some board representation. Full control is much harder to do. You have to convince people – in particular ISS [Institutional Shareholder Services] and the Glass Lewises of the world – that you have a business case. It’s a much higher threshold.
When Gildan announced it was replacing Mr. Chamandy with Vince Tyra last December, Browning West immediately called for Mr. Chamandy’s reinstatement. But given the board had taken this dramatic step, was that actually a possibility?
Realistically, probably not. On the other hand, it wasn’t just Browning West. Other shareholders came out completely independently. The fact that you had so many shareholders publicly announcing their opposition to this – that was what was really unprecedented. The facts were so unique and strange that we thought the board would be crazy to fight this.
So, after you’re first retained, what was the strategy?
You’re always having back-channel discussions, so we reached out to their counsel and right at the outset, they basically said, “We have these red lines.” So it felt, at least in the short term, that there was no way to get to a quick answer.
So you’re both digging in. What happened at that point?
We didn’t know we were going to have to take it all the way to the annual meeting. We wanted a special meeting to be held in March. We said, “This is urgent. Every month that this is happening, shareholders are losing money.” Gildan basically told us they were going to delay, because they wanted to give the world a chance to see what Vince could do. You know, I’ve dealt with these guys [opposing counsel] so many times, we know their playbook. We knew there was likely going to be some litigation, there’s going to be a regulatory thing, a board refreshment, they may even try to do a sale. A lot of times, the other side will try to intimidate you by forcing you to spend money. This time, our guys were like, “It’s not going to work on us.”
You can read the full interview here.
Charted
💡 Investment reporter Tim Shufelt looks for the key to investing in an age of disaster.
On our radar
Zoom in: Earnings include Constellation Brands Inc. on Wednesday. Tesla is expected to report second-quarter deliveries today.
Zoom out: Markets are glued to the U.S. monthly jobs report on Friday, which could point to whether the Fed might start to cut interest rates.
Rate rumble: There’s an interesting battle brewing in Thailand between its government, which is openly calling for a rate cut, and its central bank, which is not doing that. The bank’s governor is expected to reinforce his stance in an address on Thursday.
Rodeo: The Calgary Stampede kicks off Friday and runs through July 14, bringing into focus a prolonged “mega makeover” to the event space and surrounding area.
Morning markets
Global markets were mostly negative with European inflation, U.S. jobs data and France’s elections in focus.
On Wall Street, Dow Jones, S&P 500 and Nasdaq futures all pointed down. TSX futures were also lower.
Overseas, the pan-European STOXX 600 was down 0.68 per cent in morning trading. Britain’s FTSE 100 declined 0.40 per cent, Germany’s DAX declined 1.03 per cent and France’s CAC 40 lost 0.84 per cent.
In Asia, Japan’s Nikkei increased 1.12 per cent, while Hong Kong’s Hang Seng rose 0.29 per cent.
The Canadian dollar traded at 72.81 U.S. cents.