Former Gildan Activewear Inc. president and CEO Glenn Chamandy poses for a photograph following the apparel manufacturer's annual meeting on Feb, 5, 2015, in Montreal.Paul Chiasson
Two of Gildan Activewear Inc.’s largest shareholders are demanding the Canadian clothing maker reinstate its founder and chief executive officer Glenn Chamandy, saying the company botched its CEO succession.
Los Angeles-based hedge fund Browning West and Toronto-based investment management firm Turtle Creek Asset Management have written letters to Gildan’s board urging the company to immediately reappoint Mr. Chamandy. Browning holds a roughly 4-per-cent stake in Gildan while Turtle Creek has a roughly 3.3-per-cent position, according to a regulatory filing last September.
“The board’s poor handling of succession and questionable judgment when it comes to its most important responsibility and decision have put Gildan’s business and shareholders at great risk,” said the Browning West letter, signed by company founders Usman Nabi and Peter Lee.
The hedge fund praised the returns Mr. Chamandy has delivered for investors and also called for the Montreal-based company to remove chairman Donald Berg and appoint Mr. Lee to the board. It said the moves are necessary to restore stakeholder confidence and prevent what could be permanent damage, particularly because Mr. Chamandy’s replacement doesn’t appear qualified for the job.
Turtle Creek, which has been a Gildan shareholder for 10 years, said Mr. Chamandy’s termination was “hasty, inexplicable and value destructive,” characterizing him as a strong leader with extraordinary knowledge of the industry and extensive operational capabilities.
“We were understandably dismayed by the board’s abrupt termination of Mr. Chamandy, which we believe exposes Gildan to a significant loss of leadership, loss of institutional and operational knowledge, damages employee morale and potentially threatens key customer relationships,” the Turtle Creek letter said.
Gildan spokesperson Geneviève Gosselin did not immediately respond to a request for comment Thursday.
T-shirt and sock maker Gildan shocked the market Monday when it said that it had dismissed Mr. Chamandy after a 40-year tenure at the company, the last 20 of which have been as CEO, and named former Fruit of the Loom executive Vince Tyra as his replacement. Gildan shares fell 10 per cent after the announcement.
In an interview with The Globe and Mail on Monday, Mr. Berg said there was a disagreement with Mr. Chamandy over the timing of a leadership handover. Mr. Chamandy wanted a longer process while the board’s timeline was shorter, he said.
“It was our view that as you thought further out for the company, it was time that whoever was going to have to live with those decisions should be making those decisions,” Mr. Berg told The Globe.
Mr. Chamandy issued a separate statement on his own behalf Monday, saying he was told that his employment was being terminated without cause. “It is unfortunate that my vision of the path forward has differed from that of other board members,” Mr. Chamandy said, noting the company has flourished under his family’s guidance.
Gildan makes and markets activewear clothing. Its main business is manufacturing “imprintables” – basically blank T-shirts, sport shirts and fleeces used to make specialized apparel such as children’s softball team jerseys. It also sells clothing under the Gildan and American Apparel brands.
The company was founded in 1984 in a small shop in Montreal by Mr. Chamandy and his brother Greg, whose family has deep roots in the city’s garment trade. They bought a knitting mill to supply fabric for their childwear business, Harley Inc., which eventually became Gildan.
Gildan’s top three shareholders are Jarislowsky Fraser Ltd., Coliseum Capital Management, and Pzena Investment Management – each with more than 10 million shares, according to data from S&P Global Market Intelligence. Browning West and Turtle Creek are seventh and ninth respectively, the data shows. Browning West and Turtle Creek are seventh and ninth respectively, the data shows.
Jarislowsky spokesperson Quyn Pham said Tuesday the investment firm was looking to speak to all parties involved before making any comments on the change.
At the close of trading Thursday, Gildan had a market capitalization of $7.8-billion.