Gildan’s largest shareholder continues to “strongly” oppose the firing of the Montreal clothing maker’s founder and CEO, Glenn Chamandy, and criticizes the board’s decision to grant a director seat to an institutional shareholder American.
“The appointment to the board of directors of a hedge fund manager who has only held shares since last year, with an agreement to support the board for two years, constitutes a serious problem governance and a clear conflict of interest, especially considering that this hedge fund has a stake in one of Gildan’s largest clients,” argues Charles Nadim, head of research and portfolio manager at Jarislowsky Fraser, in a written communication sent to La Presse.
Glenn Chamandy was shown the door 10 days ago by the Gildan board of directors. Faced with opposition from several large institutional shareholders, Gildan’s board of directors clarified that Glenn Chamandy had served a calculated ultimatum to the board and that he wanted to make risky acquisitions. Gildan’s board of directors also offered a director’s seat to a representative of Coliseum Capital, an American investment firm that supports the company’s approach.
Charles Nadim calls on the board to recognize the “significant and unprecedented” opposition to the CEO transition and “immediately” take action to reinstate Glenn Chamandy as CEO to avoid any potential disruption to the business.
“Glenn Chamandy and his management team have allocated capital wisely for decades and we are confident in their ability to continue,” says Charles Nadim.
“We reiterate that he remains best placed to lead the company through a major program of expansion and innovation, while mentoring internal candidates in the context of a comprehensive succession plan that will result in an orderly transition of management to ensure the long-term success of the company. »
Former CN CEO and Gildan board member Luc Jobin said Sunday that Glenn Chamandy wanted to move forward with a multibillion-dollar acquisition strategy in adjacent sectors.
These acquisitions, according to Luc Jobin, would be “highly dilutive” for shareholders due to the debt and equity issues required to complete them. Luc Jobin also said that carrying out this strategy involved a risk because it requires skills that are not fully mastered by Glenn Chamandy.
Still according to Luc Jobin, Glenn Chamandy asked to review in two years the development status of an internal candidate, but that Glenn Chamandy could not tell the board with certainty whether this candidate could reach the level necessary to succeed him as CEO.
The board having responded to Glenn Chamandy that it had to complete its work of evaluating external candidates before taking a position, Luc Jobin maintains that the relationship with Glenn then deteriorated quickly.
Glenn Chamandy on Monday denied giving the board an ultimatum related to an acquisition strategy and countered that the board was attempting a diversion to distract from shareholder reaction to the board’s handling of succession planning. .
Coliseum Capital is currently Gildan’s second largest shareholder with an approximate 6% stake. Coliseum has expressed its intention to increase its stake in Gildan by purchasing shares on the market to become the largest shareholder ahead of Jarislowsky, who has a stake of approximately 7%.
Gildan’s board of directors revealed Sunday that it is inviting Coliseum co-founder and managing partner Chris Shackelton to join the company as a director.
It was not immediately possible to obtain a reaction from Gildan.
Another institutional shareholder also requested, on Tuesday, the return to office of Glenn Chamandy. New York investment firm Oakcliff Capital says Glenn Chamandy should be reinstated and the board should change chairs and include two new members who are significant shareholders.
“These changes must be made quickly, as the uncertainty created by the board’s actions is harmful to Gildan’s relationships with its customers and employees,” it is mentioned in a letter sent to the Gildan board of directors.
