Gildan No Longer for Sale as Board, CEO Resign

Gildan Activewear Inc.’s entire board has been replaced, and Vince Tyra on Thursday stepped down as president and CEO.

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Gildan’s reconstituted board and Tyra sensed time was running out after its activist protagonist won the support of three leading proxy advisory firms.

Browning West began the week with the advantage after Institutional Shareholder Services (ISS) and Glass Lewis recommended that shareholders vote for the activist’s slate of board nominees. The third leading proxy advisory firm Egan Jones subsequently came to the same conclusion and also supported a full reconstitution of Gildan’s’ board. The week prior, Browning West won the dismissal of lawsuits and claims filed by Gildan against the investment firm. The activist called the Gildan battle the “ most expensive proxy fight in Canadian history ,” totaling $17.1 million through March 31.

On Thursday, Gildan said the outgoing board appointed Browning West nominees to the board of directors. Their resignations also put a stop to discussions in connection with the sale process of the company.

“The outgoing directors believe that it was in the best interests of all Gildan stakeholders for them to resign and not stand for election at the upcoming Annual Meeting, allowing the new Board to be seated so that it can oversee the company in the most orderly and efficient manner,” Gildan said in a statement. The annual shareholders’ meeting is slated for Tuesday.

The new Gildan board members include former CEO and company cofounder Glenn J. Chamandy. Browning West said that the transition of power at Gildan has commenced to ensure that Chamandy is reinstated as the company’s CEO.

The activist investor also said that “preliminary results indicate that an overwhelming majority of shares have been voted in support of Browning West’s full eight-member slate prior to the Board’s resignation.”

“While we are disappointed that the Board ignored the clear will of its shareholders for so many months and spent tens of millions of shareholder capital in an effort to defend its mistakes, we are nevertheless gratified that the current Board has decided to cease its campaign activities and pave the way for an orderly and conclusive leadership transition,” Browning West cofounders Usman S. Nabi and Peter M. Lee said in a statement. Lee is one of the new board members at Gildan.

As for Chamandy, the cofounders said he is a “visionary leader with a track record of value creation, an unparalleled knowledge of Gildan’s manufacturing business, a deep connection with the Company’s employees and shareholders, and an impressive ability to foresee key industry shifts to keep Gildan one step ahead of competitors.”

Gildan Activist Browning West Garners Support From 2 Proxy Advisory Firms

As for the proxy battle, Nabi and Lee noted that the Gildan fight was the “first time in more than a decade that an overwhelming majority of shareholders and all leading proxy advisory firms—ISS, Glass Lewis, and Egan Jones—supported a full reconstitution of a board of directors

The battle for board control began in December after the then Gildan board fired Chamandy and hired Tyra as his successor. Browning West, which also had the support of eight other institutional investors, battled the board to get them to reinstate Chamandy. In March, the underwear and T-shirt manufacturer said the company was up for sale after receiving an unsolicited, nonbinding offer. It followed up with a refreshment its board in April.

During the months-long battle, Gildan even went so far as to say that it doesn’t have a corporate governance problem , although ISS found it troubling that the legacy directors resigned and appointed their own replacements. Glass Lewis said it was bothered by the resignation of previous directors “before investors could hold them accountable,” along with the self-selection of their replacements.

Before the new board can reinstate Chamandy, they’ll first have to voted into office by the shareholders at Tuesday’s meeting.

“We look forward to putting this contest behind us so that we can focus our energy on implementing our operating plan and positioning Gildan for long-term success,” Michael Kneeland, Gildan’s soon-to-be appointed chairman, said. “As independent directors, we will help usher in accountability and alignment at Gildan. The interests of the company and its stakeholders will remain relentlessly in focus under the new Board.”

As for Chamandy, he said that he is excited to return as Gildan’s CEO, adding, “The resilience of the team and the high quality of our newly seated Board give me great confidence that Gildan’s best days are yet to come.”

Browning West: Gildan 'Most Expensive Proxy Fight in Canadian History'