The abrupt departure of Gildan Activewear Inc.’s ex-CEO, Glenn Chamandy, has ignited a clash with the board, drawing criticism from major shareholders over the alleged mishandling of the CEO succession process.
Prominent investment firms, including Jarislowsky Fraser Ltd., Pzena Investment Management Inc., and Cooke & Bieler LP, representing around 25% of Gildan’s shares, have expressed dissatisfaction with the board’s decision to replace Chamandy with former Fruit of the Loom executive Vincent Tyra.
Chamandy, 62, voiced his discontent, stressing the importance of shareholder involvement in determining the company’s future. He criticized the board’s opaque process, highlighting his exclusion from decision-making.
Gildan’s board announced Chamandy’s departure and Tyra’s appointment on Monday, triggering a significant stock value drop. Chamandy questioned Tyra’s suitability, citing a lack of manufacturing experience, and scrutinized the board’s decision-making.
Jarislowsky Fraser, a unit of Bank of Nova Scotia, called for Chairman Donald Berg’s resignation and criticized the board’s handling of the CEO change. Charles Nadim, Jarislowsky’s head of research, expressed concerns about the abrupt shuffle, accusing directors of market misrepresentation and inadequate due diligence.
Gildan shares responded positively to news of major investors supporting Chamandy, closing higher in Toronto. However, the stock faced a 7% weekly decline, resulting in a market capitalization of about C$8 billion ($6 billion).
Cooke & Bieler LP, Gildan’s fourth-largest investor with a 5.8% stake, openly endorsed Chamandy’s reinstatement and expressed lack of confidence in Mr. Berg’s board presence.
Gildan, a global leader in t-shirt, underwear, and sock manufacturing, faces uncertainty following the leadership shakeup. The Montreal-based company, known for acquiring American Apparel in 2017, confronts questions about leadership and the future of the industry.
Despite challenges, Chamandy remains on the sidelines, leaving the final decision to shareholders. The ongoing dispute poses implications for Gildan’s leadership and its standing in the competitive clothing industry landscape.
