Glenn Chamandy holds up one of the apparel manufacturer's shirts after an annual meeting on Feb. 5, 2015 in Montreal.Paul Chiasson/The Canadian Press
Directors of Canadian clothing company Gildan Activewear Inc. GIL-T are standing firm in their controversial decision to sack former chief executive officer Glenn Chamandy, saying that in recent years he had become an ineffective leader who was barely in the office as he became increasingly focused on golf and other “personal pursuits.”
They also accuse him of violating company policies related to the safeguarding of corporate information when he was let go.
In an open letter to Gildan shareholders released Monday, directors paint a picture of an increasingly unfocused CEO who was flailing from one strategy to another as he struggled to scale an increasingly complex business. They say he tried forays into branded products and retail distribution, for example, that yielded mixed success, with an eight-year annual revenue growth rate of less than 1 per cent and writeoffs and restructurings over that time period topping $450-million.
“The board is unanimous in its conviction that retaining Mr. Chamandy as CEO would have jeopardized the future of Gildan and destroyed shareholder value,” directors write in their letter. “It became clear that he had no credible long-term strategy and no vision.”
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The board’s message signals that it is prepared to defend its actions in an increasingly intense fight with big shareholders over who should run Montreal-based Gildan, a maker of T-shirts and fleece clothing that owns the American Apparel brand.
Gildan investors including Montreal money management firm Jarislowsky Fraser have said Mr. Chamandy and his leadership team have been astute allocators of capital for decades and that he remains the best person to lead the company. Directors counter that he’d been underperforming for some time and became more detached from the business in recent years.
“He increasingly focused on outside personal pursuits, including the development of a golf course resort in Barbados,” the letter states. “His management style was unstructured, with few senior leadership meetings, and he was rarely in the office, averaging just a few days a month even long after the end of the COVID shutdown.”
As further proof of his professional detachment, the board says Mr. Chamandy never visited the new Gildan manufacturing plant in Bangladesh, one of the company’s most significant investments. They say that, in fact, he had not travelled to Bangladesh, an important manufacturing hub for the company, in more than a decade.
Mr. Chamandy did not respond to a request for comment Monday.
Gildan shocked investors when it announced Dec. 11 that it had dismissed Mr. Chamandy after a 40-year tenure at the company, the past 20 years as CEO. It named former Fruit of the Loom executive Vince Tyra as his replacement.
The sacking has created a power struggle between big investors who believe the CEO’s termination was unwarranted and the board, which insists it was. Several investors want Mr. Chamandy to be reinstated and have also called for the replacement of Gildan chairman Donald Berg.
Los Angeles-based investment firm Browning West LP said on Dec. 29 that it will seek a special shareholders’ meeting at Gildan to elect five new directors for the company’s 11-member board. Five additional institutional shareholders have also come out publicly in support of Browning’s director slate, including Jarislowsky Fraser and Winnipeg’s Cardinal Capital Management.
Gildan directors say Mr. Chamandy agreed to an orderly three-year succession plan in December, 2021, but that by the fall of 2023, he moved to entrench himself as CEO. They say he presented them with a strategic plan this past October calling for several risky and highly dilutive multibillion-dollar takeovers, and saying he would need to stay on as CEO to oversee their integration.
The board was “dubious about these high-risk acquisitions, particularly in light of Mr. Chamandy’s inability to answer even the most basic questions about his strategic proposal,” the directors say. They say they asked him to provide a thorough analysis of the plan and instead he gave them an ultimatum: Either support his strategy and his leadership or he would immediately leave and sell his stock.
The ultimatum forced the board’s hand and he was let go last month, according to the directors’ version of events.
Directors say in their letter that they also recently learned about new “questionable behaviours” by Mr. Chamandy that took place around the time of his departure and that are “inconsistent with that of a senior executive.” They say Mr. Chamandy recorded a private and confidential phone call on Nov. 24 of last year with the board chairman without the chair’s knowledge.
Mr. Chamandy also violated company policies related to the safeguarding of corporate information when he left, the directors say. In an e-mailed statement, Gildan spokesman Simon Beauchemin said the former CEO intentionally deleted messages on corporate-issued devices.
“The board of directors is currently investigating these and other matters, including Mr. Chamandy’s engagement with certain shareholders prior to his termination,” the director letter says. No other information was provided.
“Over the last year, Mr. Chamandy repeatedly said that he would, in his words, ‘go gracefully’ whenever the board decided the time was right for the company,” directors say in their letter. “However, when that time came, Mr. Chamandy did not ‘go gracefully.’ He admitted he never intended to leave and, blatantly putting his own interests ahead of those of Gildan, orchestrated his departure to maximize disruption to the company.”
Toronto-based Turtle Creek Asset Management, which has been a Gildan investor for a decade, said Monday that the board’s release “provides further evidence that they have lost touch” with shareholders. “Rather than spending time crafting an ever-changing narrative around their ill-conceived termination of Mr. Chamandy, Turtle Creek urges the board to swiftly call a special meeting that will allow all shareholders’ voices to be heard,” it said in a statement.
Editor’s note: A previous version of this article incorrectly stated that Cardinal Capital Management is based in Toronto. Its headquarters are in Winnipeg. This version has been updated.