Canadian apparel company Gildan Activewear has announced its board of directors have called for a joint annual and special meeting with shareholders on 28 May 2024.
Longstanding Gildan investors Browning West and Turtle Creek have objected to this decision with US Investment firm Browning West describing it as a “transparent attempt to buy time for a seemingly unqualified CEO with a record for value destruction”.
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Browning West representatives Usman S. Nabi and Peter M. Lee expressed concerns about the board’s so-called “ill-conceived” decisions and “publicity stunts”, which the company believes demonstrate a “complete disregard for sound corporate governance” and a “lack of respect” for shareholders.
The investors insisted the board is “oblivious” to the fact that a significant 35% of Gildan’s outstanding shares publicly support Browning West’s campaign to reinstate Glenn Chamandy as chief executive officer (CEO).
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At the upcoming meeting, Browning West is seeking to reconstitute Gildan’s board and replace directors Donald Berg, Maryse Bertrand, Marc Caira, Shirley Cunningham, Charles Herington, Luc Jobin, Craig Leavitt, and Chris Shackelton with what they described as “ethical and qualified candidates”.
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By GlobalDataCanadian investment management firm Turtle Creek Asset Management who has previously supported fellow investor Browning West on the topic of calling a special meeting without delay, pointed out that Gildan had led its last five annual meetings of shareholders at the end of April or the first week of May.
The company added: “Rather than call the meeting within two or three months, the board appears determined to frustrate and delay shareholders’ ability to hold it accountable.”
In response to Gildan’s planned court application, Browning West said it is “severely disappointed” by the board’s attempts to distract shareholders by focusing on a US regulatory question that it argues is entirely irrelevant to Browning West’s valid requisition under Canadian law.
The dispute over the decision to replace Gildan’s outgoing CEO Glenn Chamandy started in December 2023 and has been ongoing ever since.
Browning West urges Gildan to convene special meeting to avoid further damage
Browning West pointed out Gildan’s board agrees with feedback from a “critical mass of shareholders that a speedy resolution is in the company’s best interest” and argued that this is “precisely” what a more “urgently” called special meeting would provide.
Browning West urged the board to reconsider its decision and promptly hold the requisitioned special meeting as it claimed that “each day of delay risks permanent damage to the company.”
Browning West also questioned the board’s decision to pursue a legal challenge, emphasising that it does not change the reality that a significant portion of Gildan’s outstanding shareholders support holding a special meeting.
The investor also claimed the only reason the board is pursuing a legal challenge is down to being “led astray” by its high-priced legal advisors, who are economically motivated to recommend “scorched-earth” tactics.
The Browning West representatives stated: “Any legal action at this point only further impugns the board’s credibility and will serve as another justification for replacing a majority of the sitting directors. Browning West is considering all of its rights.”
Gildan Activewear had not responded to Just Style’s request for comment at the time of going to press.
Earlier this month (22 January) Gildan accused Browning West of violating antitrust laws and described its campaign to reinstate Chamandy as “misguided”.
However, Browning West confirmed to Just Style it had informed Gildan it did not breach the HSR Act because the firm is exempt from filing and waiting period requirements.
