Canadian clothing maker Gildan Activewear Inc. is moving up the start date of its new chief executive officer, frustrating investors who instead want the former CEO reinstated.
Montreal-based Gildan, whose board is locked in a clash with several major shareholders over the surprise dismissal of long-time CEO Glenn Chamandy in December, said Friday that new CEO Vince Tyra will start on Monday, Jan. 15. That’s roughly a month before he was previously slated to begin.
At the board’s invitation, Mr. Tyra has made himself available earlier “to respond to requests to engage early with key stakeholders and bring needed stability and leadership to the company,” Gildan said in a news release.
What’s happening at Gildan? A timeline of the months-long CEO corporate battle
Andew Willis: Gildan board wants last laugh in CEO showdown
Speeding up Mr. Tyra’s arrival adds more fuel to the fire in a conflict over the future of the company between Gildan’s board and major investors such as hedge fund Browning West.
The fight has taken on a personal tone, with directors attacking Mr. Chamandy for what they call a fading commitment to his job and questionable behaviour around the time he left, such as deleting messages on corporate-issued devices.
Browning filed a formal request with Gildan earlier this week to hold a special shareholders meeting without delay and reconstitute the board. It wants Mr. Tyra out, Mr. Chamandy rehired and eight of the directors on Gildan’s current 11-member board removed and replaced with new directors in order to reverse the company’s share price decline over the past month.
Two major Gildan investors – Montreal investment management firm Jarislowsky Fraser and Toronto’s Anson Funds – have told The Globe and Mail that they side with Browning West and support their eight nominees. Janus Henderson Group, headquartered in London, England, also supports the expanded slate, according to information obtained by The Globe.
Friday morning, Philadelphia-based Cooke & Bieler LP told The Globe that they, too, are backing Browning West’s updated proposals and expanded board slate. They represent “the best path forward for Gildan,” Cooke & Bieler partner William Weber said via e-mail. A wider group of investors have come out calling for Mr. Chamandy to get his job back without saying if they support Browning’s eight nominees.
“It is clear to us – and presumably our fellow shareholders – that Gildan’s board is trying to use Vince Tyra’s accelerated start date to defy shareholders who have clearly rejected Mr. Tyra” and to shift attention away from the special meeting we requested, Browning West said in a statement Friday.
“However, the board cannot run from the fact that holders of 35% of the company’s outstanding shares publicly support meaningful boardroom change and the reinstatement of Glenn Chamandy,” the statement said.
Like other Gildan shareholders, Browning West has made a significant return over the years with Mr. Chamandy at the helm. And they’ve said they’re dismayed that the former CEO wasn’t an active participant in picking his successor.
Gildan CFO made $9.1-million from share sales after CEO’s departure in December
The board has countered that Mr. Chamandy has failed to groom an internal candidate over the years and in the end sought to entrench himself as chief executive. They’ve said that they are unanimous in their conviction that keeping Mr. Chamandy on would have jeopardized the future of Gildan. “It became clear that he had no credible long-term strategy and no vision,” they’ve said.
Browning West says Mr. Tyra, a former executive at Fruit of the Loom, isn’t up to the job. They say that during his tenure as president of retail and activewear at the underwear-maker from 1997 to 2000, its share price declined by 99 per cent.
During his time as CEO of Broder Brothers from 2000 to 2005, the business’s net income became a loss and operating margins averaged barely 2 per cent, they say. By comparison, Gildan’s net earnings doubled and its stock increased five times over the same period under Mr. Chamandy’s leadership.
Gildan’s board has defended the choice, saying Mr. Tyra is an accomplished leader with deep experience in the apparel industry spanning distribution, manufacturing and brand building. Directors say that when Mr. Tyra was at Fruit of the Loom, the company faced financial challenges and that it was his restructuring plan that laid the foundation needed to stabilize the company. It was eventually sold to Berkshire Hathaway.
In the Friday news release, Gildan included statements from three people testifying to Mr. Tyra’s qualifications as the board tries to offer more detail on its decision to hire him. The first was from Yoo Jin Kim, a former principal at Bain Capital. Gildan’s board says Bain noticed Mr. Tyra’s turnaround work at Fruit of the Loom and hired him to be CEO of Broder Bros., which they owned at the time.
“With almost 30 years of private equity investing experience, I have worked with countless CEOs in multiple industries,” Mr. Kim is quoted as saying in the Gildan release. “Vince was in the top tier of those executives given his leadership strengths, ability to build strong teams and culture, financial performance, acquisition experience, and solid character.”