A war for control is happening at apparel maker Gildan Activewear Inc.Christinne Muschi/The Canadian Press
An ousted co-founder. A board of directors who lost faith. A group of dissenting shareholders. A new chief executive with no shortage of obstacles. A company up for sale.
A war for control began at apparel maker Gildan Activewear Inc. GIL-T – a company with a stock market value of $7.79-billion whose T-shirts and fleece are worn by countless amateur sports teams and school clubs – in December, 2023 after the the board dismissed the company’s CEO over succession issues.
Since then, the company’s former CEO, Glenn Chamandy, and its current CEO, Vince Tyra, have found themselves on opposite ends of a bitter corporate battle over Gildan’s future. The months-long battle saw many rapid-fire attacks, caused the company’s stock price to plummet and raised countless questions.
But, in a surprising move this week, Gildan’s board and CEO Mr. Tyra resigned – ultimately, clearing the way for the return of Mr. Chamandy and ending the boardroom battle.
Here’s a breakdown of everything that has happened so far.
Gildan Activewear dismisses CEO, defends decision
Gildan dismissed its chief executive and co-founder Glenn Chamandy last December after a 20-year tenure. The company announced he would be replaced in February, 2024, by former Fruit of the Loom executive Vince Tyra.
The unexpected move was tied to a clash over succession planning. The board of directors said a rigorous and carefully planned succession process was hatched nearly three years ago and Mr. Chamandy was initially involved. The directors said they gradually lost faith in his leadership, which came to a head at a board meeting on Oct. 31, where Mr. Chamandy issued an ultimatum involving risky, multibillion-dollar takeover proposals, which were outside the company’s core manufacturing business.
The company also paid Richard Leblanc, one of Canada’s leading experts on corporate governance and accountability, to analyze whether its board had followed “a good and rigorous process” on the CEO succession planning. The report, released by Gildan in February, said the company followed the proper process.
Gildan shareholders demand that company reinstate CEO Glenn Chamandy
A few days after Mr. Chamandy’s dismissal, two of Gildan’s largest shareholders – Los Angeles-based investment fund Browning West and Toronto-based investment management firm Turtle Creek Asset Management – wrote letters to the board urging the company to immediately reappoint him.
The list of shareholders calling for Mr. Chamandy’s reinstatement began to grow in the following days and included British-American firm Janus Henderson and New York-based Pzena Investment Management.
Montreal investment firm Jarislowsky Fraser Ltd., which is believed to be Gildan’s biggest shareholder, with a 6.9-per-cent stake, said on Dec. 19 that it stood firmly against the board’s decision to terminate Mr. Chamandy.
According to Browning West, nine shareholders, who hold a combined 35 per cent of Gildan’s shares, have publicly voiced their support for Mr. Chamandy and have called on the company’s directors to reverse course.
Ousted CEO Glenn Chamandy speaks about his dismissal
Glenn Chamandy in Montreal, on Feb. 5, 2015.Paul Chiasson/The Canadian Press
In a December interview with The Globe and Mail, Mr. Chamandy said he had no plans to leave his job at the activewear company.
“I’m very angry with the way they handled me, to be honest with you,” he said. “I had no intention of leaving. You know, my view is that I would leave when I think the time is right for the company.”
While succession planning was a part of regular business, Mr. Chamandy said there was never any real move to explore changing CEOs until this past summer, when he was told the board would look for outside candidates to replace him. Ultimately he declined to co-operate in any plans because he didn’t believe it was the right time for a CEO switch.
“I said, ‘I just don’t think it’s a great idea,’” he recalled. “And I told them that if they basically go down this path, they can terminate my contract without cause.”
The company was founded in 1984 in a small shop in Montreal by Mr. Chamandy and his brother Greg. Their family has deep roots in the city’s garment trade.
Mr. Chamandy’s record as CEO has also been scrutinized amidst the drama. Last year, Honduras’ Supreme Court of Justice determined that Gildan had violated the country’s labour laws and ordered the company to rehire five workers who had been unlawfully terminated years earlier. Robyn Doolittle, Nicolas Van Praet and Andrew Willis spoke to one of the five workers, Rosa Dalila López Corea, about her experience and the company’s labour practices abroad.
Browning West spearheads campaign to reinstate ousted Gildan CEO, fire board members
Browning West spearheaded an activist shareholder campaign in January by filing a formal request with Gildan to hold a special shareholders meeting without delay. The U.S. company said it wanted Glenn Chamandy rehired as CEO and eight of the company’s 11 board members replaced with new directors.
Gildan retaliated on Jan. 22 by releasing a statement accusing Browning West of illegally buying up shares of the company. It said Browning West violated U.S. antitrust law, but the investment fund denies it acted inappropriately.
At the end of January, Browning West dropped its request for a special shareholders meeting and said it would present its slate to replace a majority of the board at the annual general meeting on May 28 instead. The U.S. investment firm also filed an application in March requesting that the Quebec Superior Court compel Gildan to hold the AGM and not delay it. The firm also wants the court to approve the naming of an independent chairperson to oversee the meeting to ensure a fair and transparent process.
Already the Browning West slate has the support of several big investors, including Jarislowsky Fraser and Turtle Creek Asset Management. In all, the firm says, an estimated 35 per cent of investors have said they want Gildan to reverse its decision. Under their new plan, Browning West founders Usman Nabi and Peter Lee said, the share price could reach US$100 or more over the next five years. Other shareholders doubt that claim, as Gildan shares have never topped US$45 on the New York Stock Exchange and have never been higher than $55 on the TSX.
According to Mr. Nabi, Browning West is an “occasional activist” — when it gets active, it takes aim at a company’s leadership with the mindset of a long-term owner. The partners have intervened and taken board roles at four public companies in the United States and the U.K.: Six Flags, Tempur Sealy, Domino’s and Countryside/Vistry Group.
Gildan’s new CEO, Vince Tyra, at the centre of the corporate battle
Gildan CEO Vince Tyra in Toronto, on Feb. 1.Christopher Katsarov/The Globe and Mail
Vince Tyra began his stint as Gildan’s new CEO on Jan. 15, a month earlier than planned. Previously, he was the athletic director of the University of Louisville from 2018 to 2021 and was an executive at Fruit of the Loom from 1997 to 2000.
In a February profile in The Globe, the new CEO said he would have loved to reach out to Mr. Chamandy during the recruitment process but couldn’t because he’d signed a nondisclosure agreement and couldn’t talk to anyone about it. (The two used to be friends.) He also said he’s moving ahead with the full conviction that he’ll remain as CEO.
In more recent news, Gildan is publicly accusing Browning West of planting a misleading story in U.S. media about Mr. Tyra – something the shareholder has staunchly denied. The New York Post reported on March 12 that when Mr. Tyra was running a different company two decades ago, he was involved in an affair with a female subordinate.
In interviews with The Globe, however, Mr. Tyra and the female executive said this is a deliberate mischaracterization of a brief relationship between two consenting, unattached adults. The story, they said, is an uncalled for personal smear designed to score points in the company’s proxy war.
The company is also accusing Browning West of violating American securities law. Gildan sent a letter to the U.S. Securities and Exchange Commission on March 14, saying the U.S. investment fund made “false and highly prejudicial personal attacks against Mr. Tyra and the board” as part of its campaign to take control of Gildan’s board of directors and remove Mr. Tyra as CEO. Browning West has since called the allegation “baseless.”
During an investor update on April 15 after his first 90 days as Gildan CEO, Mr. Tyra provided a snapshot of his general strategic priorities for the company: pushing further into overseas markets and strengthening the company’s main brands as it sets up its next leg of growth.
Gildan’s board puts the company up for sale
In a March 19 report from The Globe and Mail, Andrew Willis and Nicolas Van Praet report that the Gildan board has put the T-shirt manufacturer up for sale. The company received a takeover approach over the past few weeks from a potential buyer and responded by giving investment banks RBC Capital Markets and Goldman Sachs Group Inc. a mandate to look for additional bidders, according to two sources who spoke to The Globe.
The company set an April 10 deadline for potential buyers to make their initial offers.
Gildan’s board, CEO Vince Tyra resign
Gildan’s entire board of directors and CEO Mr. Tyra resigned on May 23, clearing the way for the return of former CEO Mr. Chamandy.
The board’s decision to quit came after many of Gildan’s largest shareholders joined activist fund manager Browning West in the campaign to reappoint Mr. Chamandy. In the past week, shareholder advisory companies Institutional Shareholder Services Inc. and Glass Lewis recommended investors back Browning West’s bid to bring back Mr. Chamandy by voting for its slate of eight Gildan directors. Those eight directors became the new board as of May 23.
The former board resigned after it became clear they would lose a shareholder vote on the composition of the board scheduled for Gildan’s annual meeting on May 28. The ISS and Glass Lewis endorsements of Browning West’s slates meant index funds, which hold a significant stake in Gildan, would vote for the dissident’s slate.
The news marks a surprising end to one of the nastiest corporate power struggles in recent years in Canada.
With reports from Nicolas Van Praet, Robyn Doolittle, Andrew Willis and David Milstead.