Gildan Activewear Inc. is accusing its recently terminated CEO of having inappropriately close relationships with some of the shareholders calling for his reinstatement.Christinne Muschi/The Canadian Press
Gildan Activewear Inc. GIL-T says it has uncovered new information suggesting former chief executive officer Glenn Chamandy was even less engaged in his job than previously thought and had an undisclosed relationship with an investor now demanding he be rehired.
“In addition to rarely being in the office, holding few senior management meetings and never bothering to visit the company’s newest manufacturing plant, Gildan has now learned that Mr. Chamandy sent on average no more than a handful of work e-mails a day and had few business-related meetings diarized on his calendar,” the Canadian maker of T-shirts and fleece said in an update Tuesday after markets closed.
What’s happening at Gildan? A timeline of the months-long CEO corporate battle
Gildan directors are probing Mr. Chamandy’s activities around the time he was dismissed last month, pouring through his files and electronic data because of what they’ve called his “questionable behaviour.” They say what they’ve uncovered so far underscores the broken trust between the board and the former CEO towards the end of his employment.
The board says the investigation shows that Mr. Chamandy failed to disclose that he had invested in funds managed by an unnamed Gildan shareholder now calling for his reinstatement as CEO. A senior executive of that shareholder also bought a multimillion-dollar property at Apes Hill, the private golf course in Barbados owned by Mr. Chamandy, they said.
“Mr. Chamandy’s actions and lack of transparency with the board are further indication that new leadership was required at Gildan,” directors said in a statement Tuesday. On Monday, Vince Tyra, a former executive at Fruit of the Loom, started as Gildan’s new CEO.
It’s the latest development in what has become a rapid-fire back and forth fight between Gildan’s board and several major shareholders over the the surprise dismissal in December of Mr. Chamandy, the company’s co-founder and long-time CEO. And for the first time, it casts the spotlight on the activist investors backing him.
Directors have said they’re unanimous that Mr. Chamandy’s continued employment would have jeopardized the company’s future. They say they lost confidence in his leadership over time as he became in increasingly distracted with his personal pursuits and that he had no credible growth plan for the company.
Shareholders including Browning West and Montreal investment management firm Jarislowsky Fraser say Mr. Chamandy has delivered in spades for investors over the years and want him back. Browning filed a formal request with Gildan last week to hold a special shareholders meeting without delay and reconstitute the board with eight new directors.
Mr. Chamandy appears to have a close relationship with Browning West, according to the Gildan board. While he was Gildan’s CEO, he was invited to be one of the guest speakers at the hedge fund’s February, 2023, investor day, they said. While Browning West has been invested in Gildan for years, Mr. Chamandy appears to have treated it differently from other shareholders, the directors said.
As one example, on Nov. 8 of last year, Mr. Chamandy played host to Browning West founders Usman Nabi and Peter Lee as well as a number of investors in the hedge fund on an “exclusive visit” to Gildan’s manufacturing plant in Honduras, the board said. The directors said they could find no other example in recent history of any other Gildan shareholder being offered similar treatment.
In a statement sent to The Globe Tuesday evening, Browning West said the Gildan board is sending out “increasingly desperate messages” that are failing to divert attention away from substantive shareholder concerns. The hedge fund said the Honduras visit is an example of the “rigorous diligence” it performs to understand the companies it invests in.
“As a result of our understanding of the operational complexity of Gildan’s manufacturing process, we know that Vincent Tyra – who lacks manufacturing experience and has a record of value destruction – is an extremely poor leadership choice,” Browning West said. “It has likely become clear to all shareholders that the board is much more focused on self-preservation than accepting shareholders’ views and creating value.”
Browning West is not the unnamed shareholder managing the funds Mr. Chamandy invested in, according to a well-placed source familiar with the situation. The Globe and Mail is not naming the source because they were not authorized to speak to the media about private company matters.
Reacting Wednesday morning, Mr. Chamandy defended the relationships he and his management team carved out with stakeholders over the years. He said they were instrumental in establishing a respected company that is trusted by its shareholders, customers and employees.
“It is with regret that I observe the board’s current focus on a strategy seemingly aimed at undermining my reputation and my record through insinuation and distortion of the truth,” Mr. Chamandy said. “The board’s latest release barely warrants a response. It continues to reflect an approach that is misguided, misleading, and value-destructive, prioritizing the obsession of board members with their own reputations above all else.”
Gildan directors say Mr. Chamandy agreed to an orderly three-year succession plan in December, 2021, but that by the fall of 2023, he had moved to entrench himself as CEO.
They said the Honduras visit was just a week after the former CEO made a major strategy presentation to the board calling for the company to make at least two major multibillion-dollar acquisitions and keep him in charge to oversee the integration. The board has said it was skeptical about these acquisitions, particularly in light of Mr. Chamandy’s inability to answer even the most basic questions about his strategic proposal.
Directors 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.
On Nov. 25, Mr. Chamandy sent the board a letter indicating he’d grown impatient by their lack of response to his strategic proposal, calling it “nothing other than an insincere delaying tactic,” because the board was in advanced talks with another CEO candidate and wanted him gone.
By the next day, he’d already begun moving out of his office, Gildan said.