Gildan replacing five directors ahead of AGM, will back two Browning West nominees

MONTREAL — Gildan Activewear Inc. is making changes to its board of directors in an attempt to head off a move by an activist shareholder looking to replace a majority of the board at its annual meeting next month.

U.S. investment firm Browning West wants to replace eight of Gildan's 12 directors with its own nominees in a move to bring back founder Glenn Chamandy as chief executive.

Gildan, which announced late last year that Chamandy would be replaced by Vince Tyra, said Monday it will replace five members of its board of directors ahead of its annual meeting set for May 28.

It also says current board members Luc Jobin and Chris Shackelton will not run for re-election and that it will recommend shareholders vote for Karen Stuckey and J.P. Towner, who are two of Browning West's eight nominees.

The new directors who will join the Gildan board on May 1 are Tim Hodgson, Lee Bird, Jane Craighead, Lynn Loewen and Les Viner. They will replace Donald Berg, Maryse Bertrand, Shirley Cunningham, Charles Herington and Craig Leavitt.

Hodgson, who served as chief executive of Goldman Sachs Canada from 2005 to 2010, is expected to replace Berg as chair.

“I look forward to working with this highly qualified board and management team to realize the full benefits of Vince’s ambitious yet realistic plan to drive growth by enhancing the Gildan sustainable growth strategy," Hodgson said in a statement.

"The refreshed board and I fully believe in Vince and his talented team as well as Gildan’s leading market position and growth prospects."

Gildan has been embroiled in controversy ever since it announced Chamandy was being replaced by Tyra.

The company has said Chamandy had no credible long-term strategy and had lost the board’s confidence. But several of Gildan's investors have criticized the company for the move and called for his return.

Those investors include the company’s largest shareholder, Jarislowsky Fraser, as well as Browning West and Turtle Creek Asset Management.

In announcing the board changes, Gildan said it met with shareholders including those who Browning West has counted as supportive.

"Our slate strikes a balance between ensuring the board retains historical continuity during a period of transition and provides fresh perspectives to ensure it continues to serve its important oversight function on behalf of all shareholders," the company said.

Yet Browning West still had qualms about the company's approach.

"While we are gratified that every single incumbent director responsible for the board’s many failures is stepping aside, we are disappointed that it is due in part to the board’s relentless focus on protecting Vince Tyra to avoid accountability," Usman S. Nabi and Peter M. Lee of Browning West said in a statement.

They again called for the return of Chamandy and in a press release provided a statement from the former chief executive, who said that when he returns as CEO, he wants to be supported by the highest quality board.

"I have spent time with members of the Browning West slate and believe they possess necessary track records," stated Chamandy.

Gildan said last month that it has formed a special committee of independent directors to consider a "non-binding expression of interest" from an unnamed potential purchaser and contact other potential bidders.

But Browning West and Turtle Creek have said the current board cannot be trusted to oversee a sale of the company.

The company said Monday that there continues to be external interest in acquiring the company and the process is ongoing.

Browning West, however, has alleged that the Monday's changes to the board were triggered by the collapse of its sale process.

This report by The Canadian Press was first published April 22, 2024.

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The Canadian Press