The Montreal clothing maker stunned 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 as his replacement former Fruit of the Loom executive Vince Tyra, who started last week.Christinne Muschi/The Canadian Press
Former Gildan Activewear chief executive Glenn Chamandy is coming out swinging against the board of directors that turfed him, saying their efforts to portray him as a distracted and ineffective leader are “false, defamatory and misleading.”
In a four-page statement released late Tuesday, the Montreal executive goes through three main points raised so far by Gildan’s board to justify his termination and picks them apart in a bid to uphold his reputation and defend his track record. He says while he delivered more than $1.3-billion for shareholders in dividends and buybacks over the past four years alone, directors seem intent on “destroying” that legacy with their attacks against him.
“All of these are serious acts of defamation,” Mr. Chamandy said, adding his lawyers have sent the company a letter telling them to cease and desist. “Sadly, I am but one of many victims of the board’s rogue behaviour and value-destroying actions. Gildan’s employees, customers and shareholders are now facing an uncertain future because of it.”
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It’s the latest development in an intense and very public power struggle over the future of Gildan, owner of the American Apparel brand, and is sure to put more pressure on the company’s board. The clash has become an almost daily tit-for-tat slugfest between Gildan directors, who insist they were entirely justified in sacking Mr. Chamandy, and several major shareholders pushing for his return.
The Montreal-based clothing maker stunned 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 as his replacement former Fruit of the Loom executive Vince Tyra, who started last week.
Nine dissident investors holding an estimated 35 per cent of Gildan’s stock have called publicly for Mr. Chamandy’s reinstatement, some of them saying Mr. Tyra isn’t qualified for the job. They say Mr. Chamandy has delivered solid returns for them over the years and should have been heavily involved in the succession process.
The board says the current situation could have been avoided, but Mr. Chamandy refused to co-operate in a smooth transfer of leadership. Neither side shows signs of backing down. A resolution will likely come with a shareholders meeting, though it’s not clear when that will be.
“This is becoming quite acrimonious,” said Louis Hébert, a professor at Montreal’s HEC business school. “There’s an animosity here now. It’s difficult to see a gracious exit for either side. There will be a winner and a loser.”
For weeks, Gildan directors have tried to explain the many reasons why they showed Mr. Chamandy the door. To sum up their version of events: Over time, they lost trust and confidence in a CEO they say had no credible long-term strategy for the company. And when he tried to entrench himself by proposing a high-risk acquisition strategy only he could oversee, they let him go. They called it an ultimatum they couldn’t accept.
Mr. Chamandy said Tuesday that while his management team did review with the board “several different inorganic” growth options for the company during an Oct. 31 meeting, there was “never any engagement” with those options and “there was never any ultimatum” about them. He said the only thing that could be interpreted as an ultimatum is his letter to Gildan’s chairman on Nov. 25 demanding clarity on his employment.
More recently, directors have sharpened their justifications by attacking Mr. Chamandy’s day-to-day leadership, saying he’d become distracted by personal pursuits such as the development of a golf course in Barbados. According to Gildan’s board, Mr. Chamandy was rarely in the office, held few management meetings and sent on average “no more than a handful” of work e-mails a day.
Mr. Chamandy counters that none of the allegations that his leadership was ineffective were ever raised with him, not even when he was let go. He says he disclosed his personal projects to the company and they were never called into question. He says his management style has not changed in recent years and that he remained deeply engaged in the business.
Decisions on his compensation do not suggest Gildan directors had any issues with him, he says. “You will not find anywhere in any disclosures made or endorsed by the board, any commentary regarding my performance which is less than very positive,” Mr. Chamandy said Tuesday.
In its own statement released Tuesday, Gildan said the board has consistently acted to carry out its fiduciary duties to ensure management had a strategy for the longer term, to prepare for the succession of the CEO, and to position Gildan for future success by recruiting and appointing the right CEO. The company said the bottom line is that that Mr. Chamandy agreed to a timeline to hand over the reins in December, 2024 – a plan he later reneged on.
The board is also probing Mr. Chamandy’s activities around the time he was dismissed, poring through his files and electronic information because of what they’ve called his “questionable behaviour.” Directors say what they’ve uncovered so far, including certain relationships with investors, underscores the broken trust between the board and the then-CEO toward the end of his employment and the need for new leadership.
The board has said that its investigation shows Mr. Chamandy failed to disclose that he had invested in funds managed by a Gildan shareholder that has now come out in support of reinstating him as CEO. That investor is Toronto-based Turtle Creek Asset Management, The Globe and Mail reported Monday.
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According to Gildan directors, Mr. Chamandy also appears to have a close relationship with Browning West, another shareholder in the company. As one example, Mr. Chamandy played host to Browning West’s founders as well as a number of investors in the hedge fund on an “exclusive visit” to Gildan’s manufacturing plant in Honduras this past November, the board said. The directors said they could find no other example in recent history of any other Gildan shareholder being offered similar treatment.
Concerning his ties to investors, Mr. Chamandy had previously provided little in the way of explanation. He told The Globe this week that he is not an investor in Turtle Creek itself. Rather, he said a team of asset managers handling the affairs of his family office and foundation have “allocated varying minor percentages of assets under management to Turtle Creek-managed funds on a strictly passive basis” over time.
As for suggestions that he showed preferential treatment toward Browning West, he said that never happened. “I did not have any improper one-on-one interactions with any representative or agent of any shareholder of Gildan,” he said.
The Honduras plant visit was not “hosted by the CEO” as the board stated but had long been scheduled by Gildan’s investor-relations team, Mr. Chamandy said. Similar tours of the plant had been arranged for other shareholders including Coliseum Capital Management as recently as this past summer, he said.
Browning West filed a formal request with Gildan on Jan. 9 to hold a special shareholders’ meeting without delay and vote in eight new directors, a majority of the company’s current 11-member board. The proposed slate is supported by five shareholders, including Montreal-based investment management firm Jarislowsky Fraser and New York-based Oakcliff Capital.
Gildan has yet to formally respond to that meeting request but on the weekend, it challenged the validity of Browning’s recent purchases of Gildan shares giving it the right to make the request. Browning says the claims are bogus and amount to little more than stalling tactics by the Gildan board.
Some big Gildan shareholders agree.
“Stop wasting time and money. Hold the vote,” Oakcliff Capital executives Bryan Lawrence and John Jamgochian wrote in a letter to Gildan’s board Monday. “It is silly to do otherwise.”