Gildan Activewear Inc. head office is seen in Montreal, Dec. 11, 2023.Christinne Muschi/The Canadian Press
Gildan Activewear Inc. chief financial officer Rhodri Harries sold $23.9-million worth of stock in the days after the company sacked chief executive officer Glenn Chamandy in December, making $9.1-million in profit on his stock options in the process.
Gildan GIL-T said publicly on Monday, Dec. 11, that it was firing Mr. Chamandy in a dispute over succession and his strategic plan. Mr. Harries made the sales Tuesday, Dec. 12, through Friday, Dec. 15, according to securities filings that track stock sales by company executives and board members.
Mr. Harries has served as Gildan’s CFO since he was hired by Mr. Chamandy in April, 2015, from Rio Tinto Alcan.
In a statement e-mailed to The Globe and Mail, Gildan spokesperson Geneviève Gosselin said Mr. Harries remains Gildan’s largest employee shareholder with the stock and incentive shares he owns.
“Mr. Harries indicated to the company his intention to make trades as part of an effort to diversify his personal portfolio before he was informed that Glenn Chamandy was leaving the company,” she said. She also said there was a narrowed window of trading days in December for Mr. Harries, which would not reopen until the end of February.
U.S. hedge fund steps up bid to reinstate ousted Gildan CEO, bring in new directors
The dismissal of Mr. Chamandy has turned into an ugly fight between the company and the former CEO, who is backed by at least nine money managers who have gone public with their displeasure.
One shareholder, Browning West, is attempting to sack most of the Gildan board, including its chairman, and bring back Mr. Chamandy.
Meanwhile, the ex-CEO and the company are trading barbs, with Gildan alleging this week that Mr. Chamandy was too preoccupied with developing his private golf course to run the company properly.
Mr. Harries’s sales were aggressive in terms of his overall holdings. Records show he exercised 537,255 options that week, more than half of the 914,376 options he held when Gildan fired Mr. Chamandy on Dec. 11.
Gildan’s executive stock-option program is what’s called cashless exercise. When Mr. Harries chose to exercise the options, Gildan issued shares and sold them on the open market. Gildan then paid Mr. Harries the difference between the options’ exercise price and the proceeds from the stock sale.
The options represented the entirety of a special retention grant of options Gildan made to Mr. Harries in late 2020. That year, Gildan gave special compensation packages to Mr. Chamandy, Mr. Harries and Benito Masi, the company’s president of manufacturing.
Gildan described the 2020 packages to Mr. Harries and Mr. Masi as the result of “the critical need to retain and incentivize experienced and highly motivated senior executives to carry out the company’s long-term strategic objectives.” Gildan estimated the value of the options grant at US$2.6-million, according to disclosures at the time.
The options “vested,” or became usable, on Nov. 2, 2023. They did not expire, however, until November, 2027, meaning Mr. Harries could have waited nearly four more years to see if Gildan shares rose above current levels.
If Mr. Harries retires, he has 60 days after he leaves to exercise any vested options, and if he is terminated, he has 90 days, according to the terms of Gildan’s plans, as disclosed in the company’s management information circular.
The options for Gildan’s New York Stock Exchange-listed shares carried an exercise price of US$20.77. He sold the shares for prices between US$32.93 and US$33.83 the week of Dec. 11. The Globe has converted his sales and profits into Canadian dollars for this article.
Mr. Harries’s recent sales have helped make Gildan insiders some of the biggest sellers of the company’s stock in Canada in the past two months, according to INK Research. The firm tracks these sales on the premise they offer insight into sentiment for the stocks’ prospects.
As of INK’s Jan. 8 report, Gildan ranked sixth among Canadian companies for “net selling,” a measure of proceeds of stock sales, offset by any insider purchases. Gildan had $30.3-million in net selling in the past 60 days, INK Research said.
“Insider public-market activity at Gildan Activewear over the past six months has been uninspiring,” INK Research CEO Ted Dixon said in e-mailed comments. “The stock is now in the bottom 30 per cent of the INK rankings. At this point, it will be worth watching what insiders do as boardroom events unfold.”