Two major institutional shareholders of Gildan claim that the board of directors made a blunder in dismissing Glenn Chamandy and are demanding that he be brought back to the helm of the Montreal clothing manufacturer.
Glenn Chamandy was shown the door on Sunday by the board of directors. Co-founder of Gildan, the 61-year-old entrepreneur had led the company since 2004 and served on the board of directors since 1984.
Gildan stock fell 11% Monday in response to news of Glenn Chamandy’s departure.
Turtle Creek Asset Management, a Toronto asset manager and Gildan shareholder for a decade, and Bowning West, a Los Angeles investment firm, sent a letter to Gildan’s board of directors on Thursday urge them to reconsider their decision.
“The Board of Directors made a serious mistake in terminating Glenn Chamandy. We call on the Board to reverse this inexplicable, ill-advised and value-destroying decision and reappoint Glenn Chamandy as CEO,” Turtle Creek’s missive reads.
One of Gildan’s 10 largest shareholders with a 3% stake, Turtle Creek says it is “dismayed” by the sudden dismissal of Glenn Chamandy which exposes Gildan “to a significant loss of leadership, a loss of institutional and operational knowledge, a deterioration in employee morale and a potential threat to relationships with key customers.”
Turtle Creek maintains that Gildan requires “uniquely qualified and experienced” leadership and notes that the firing of Glenn Chamandy appears to have been done “in haste, without meaningful shareholder engagement and without consideration of the significant negative impact.” on Gildan’s activities.
The Ontario institutional investor says he considers Gildan to be one of the great Canadian success stories. “Over the past 40 years, Gildan has grown from a small family business to a global apparel company with sales of more than US$3 billion. It has outperformed and outpaced many other players in a tough and competitive industry. »
Turtle Creek attributes Gildan’s success in large part to the vision and leadership of Glenn Chamandy. “Shareholders who were astute enough to purchase shares at the time of Gildan’s initial public offering in 1998 were handsomely rewarded. Gildan’s stock price has increased 90-fold over the past 25 years,” the letter sent to the board of directors said.
Also a top 10 shareholder in Gildan with a similar stake to Turtle Creek, Bowning West is seeking a seat on the board and demanding the departure of current board chairman Donald Berg.
It was not immediately possible to obtain a reaction from Gildan or from Glenn Chamandy.
Gildan’s board of directors appointed Vince Tyra, a 58-year-old American, to take over. He is due to take up his post on February 12. Until then, the interim is provided by Craig Leavitt, a member of the board of directors.
In his letter, Browning West is also very critical of the choice of Glenn Chamandy’s successor. “It is alarming that Vince Tyra has a significant history of value destruction. »
In an interview with La Presse earlier this week, the chairman of the board, Donald Berg, explained the departure of Glenn Chamandy by differences on a few points, but that the main point of contention was the timing of the implementation of the succession plan of the company. “Organizing a transition with a founder is always a delicate operation. » It appears that Glenn Chamandy was not ready to leave while the board wanted to make changes.
Donald Berg stressed Monday that the time is right for a change because the company is “doing very well, gaining market share and has a good plan in place for the next few years.”
Donald Berg said he tried in vain to agree with Glenn Chamandy on when he would retire in order to achieve a harmonious transition.
Glenn Chamandy said Monday that he was not granting an interview, but nevertheless indicated that he finds it “regrettable” that his vision of the future differs from that of the other members of the board and noted that Gildan has decided to terminate their contract “without cause”.
It is possible that Glenn Chamandy had a disagreement with the board over the selection of his successor and preferred an internal candidate, according to CIBC analyst Mark Petrie.