Gildan Activewear Inc. president and CEO Glenn Chamandy following the apparel manufacturer's annual meeting on Feb. 5, 2015 in Montreal.Paul Chiasson
Gildan Activewear Inc. GIL-T has failed to convince a prominent shareholder that ousting its former chief executive officer was warranted, putting further pressure on its board of directors as it tries to win backing for its decision in the days ahead.
Montreal investment firm Jarislowsky Fraser Ltd., which is believed to be the biggest shareholder in Gildan with a 6.9-per-cent stake, said Tuesday that it stands firmly against the board’s decision to terminate Glenn Chamandy last week. Jarislowsky also decried the nomination of Christopher Shackelton, co-founder and managing partner of U.S. hedge fund Coliseum Capital Management LLC, to the Gildan board of directors, calling it a “serious” governance concern.
“We ask the board to acknowledge the significant and unprecedented opposition to the CEO transition and reinstate Glenn Chamandy as CEO effective immediately to avoid any potential disruption to the business,” Jarislowsky’s head of research, Charles Nadim, said in an e-mailed statement Tuesday.
Jarislowsky’s stand adds more heat to the power struggle building at Gildan, a fight caused by the Montreal-based T-shirt and sock maker’s announcement on 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.
Luc Jobin, a Gildan director, told media outlets Sunday the dismissal was triggered by an ultimatum Mr. Chamandy gave to the board in late October seeking its approval to begin work on two to three multibillion-dollar acquisitions outside the company’s core manufacturing business, which became tied to the issue of CEO succession.
After issuing the warning, the former CEO didn’t engage with the board to flesh out his takeover ideas or talk any more about candidates to replace him, Mr. Jobin said. “At the end of the day, he walked away,” the director said. “In my view, he was never really in good faith in terms of wanting to work this out with the board. He had his own agenda.”
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Mr. Chamandy denies he issued any such ultimatum.
Gildan announced Sunday that it struck an agreement with Coliseum by which the hedge fund will support Gildan’s full slate of board nominees at its next two annual meetings. Coliseum, which has a roughly 6-per-cent stake in the company, intends to increase its investment in Gildan over time to become its biggest shareholder, the clothing maker said. Meanwhile, Mr. Shackelton has joined Gildan’s board, the company said.
Mr. Jobin said the board would hold new talks with Gildan shareholders this week in a bid to convince them it acted appropriately. Clearly, however, those talks have not achieved the board’s desired outcome in some cases as opposition to the board’s actions deepens.
For Jarislowsky’s research chief, Gildan’s deal with Coliseum is highly questionable. “We find the nomination to the board of a hedge fund manager, who has only held shares since 2022, with the expectation to vote in line with the board for two years, a serious governance concern and a clear conflict of interest, especially when combined with the fact that this hedge fund owns a stake in one of Gildan’s largest customers,” Mr. Nadim said in the statement.
His comments echo those made by Anson Funds, a smaller Gildan investor.
“Anson Funds has become increasingly concerned by the board’s handling of succession planning and disregard for shareholder feedback,” the firm said in a statement Monday evening. “We are further troubled by the board’s decision to strike a backroom deal granting an individual shareholder a board seat in exchange for their support before engaging with other investors.”
A Gildan spokesperson did not immediately return an e-mail seeking comment on the new developments.
Several large shareholders have called for Mr. Chamandy’s reinstatement. In addition to Jarislowsky Fraser, they include New York-based Pzena Investment Management and Toronto-based Turtle Creek Asset Management.
Los Angeles-based hedge fund Browning West has said it would apply for a special shareholders meeting to reconstitute the board if it doesn’t give the former CEO his job back.