The power struggle is getting worse at Gildan as the board of directors launches a new charge against former CEO Glenn Chamandy, denouncing in particular his commitment and behavior described as questionable.
“Glenn Chamandy was CEO for 20 years and over the last few years he has gradually stepped back from his role as CEO, focusing more on his outside personal activities, including building a golf resort in Barbados,” reads an open letter from the board of directors to shareholders released Monday.
“His management style was unstructured, he held few meetings with senior management and rarely showed up in the office, on average only a few days a month, even long after the COVID lockdown ended », He added.
“Glenn Chamandy never visited Gildan’s new manufacturing plant in Bangladesh, one of our largest investments. He hasn’t moved to Bangladesh, a major manufacturing hub for the company, in more than a decade. »
The board also claims to have recently become aware of new information regarding behavior by Glenn Chamandy which occurred around the time of his departure and which is “inconsistent with that of a member of senior management”.
Glenn Chamandy, according to the council, recorded a private and confidential telephone call that he had on November 24 with the president of the council without the latter’s knowledge. Still according to the board of directors, Glenn Chamandy also violated, upon his departure, Gildan’s policies on the protection of company information.
Glenn Chamandy was removed as CEO on December 10 by the board of directors. This decision was then justified by differences linked to the succession plan and by emphasizing that Glenn Chamandy wanted to move forward with a risky acquisition strategy worth several billion dollars.
The board believes that retaining Glenn Chamandy as CEO would have compromised Gildan’s future and destroyed shareholder value.
“Glenn Chamandy attempted to portray this as a dispute over the board’s CEO succession process, which is not the case. Rather, it is about the future of Gildan,” it is stated in the open letter published Monday.
The board’s release of new information comes as several major Gildan shareholders support an initiative to oust directors and bring back Glenn Chamandy at the helm of Gildan.
The American institutional investor Browning West wants to hold a special meeting of Gildan shareholders with the aim of electing new directors, including Glenn Chamandy.
In its open letter published Monday, the board states that Glenn Chamandy has had difficulty growing an “increasingly complex” business in recent years and emphasizes that in the absence of a coherent long-term strategy , Glenn Chamandy moved from one opportunistic strategy to another.
“He made forays into branded products, retail distribution, international expansion and yarn production, which met with mixed success, resulting in an eight-year annual revenue growth rate by less than 1% and, during this period, to write-offs and restructurings of more than $450 million. »
In this context, it was striking to read Browning West’s letter of December 14, in which it was asserted that, under Mr. Chamandy’s leadership, Gildan’s share price was “well positioned to reach 60 to $80 per share over the next two years.” This statement stands in stark contrast to Glenn Chamandy’s 2023 long-term planning presentation to the board on October 30, in which he said organic growth would be capped, with the intrinsic value of the stock price falling sharply in below the range cited by Browning West.
Gildan shares ended the week at $42.53 on the Toronto Stock Exchange.
