Dive Brief:
- Gildan Activewear set a date for an annual and special meeting of shareholders following a month of calls from investor Browning West LP to do so. Browning West’s requisition is a move ultimately meant to reinstate Gildan’s former president and CEO Glenn Chamandy, according to a Gildan press release Monday.
- Gildan scheduled the meeting for May 28 in response to Browning West asking shareholders to remove a majority of the company’s directors and replace them with a slate of eight directors it selected. The company ousted Chamandy in December 2023, which Chamandy said was without cause.
- Gildan said it was filing an application to a Quebec, Canada, court to nullify Browning West’s requisition. If the application is successful, Gildan plans to cancel the May special shareholders meeting.
Dive Insight:
In its press release, Gildan questioned the validity of the Browning West’s requisition and accused Browning West of violating the U.S. Hart-Scott-Rodino Antitrust Improvements Act of 1976, saying Browning West accumulated shares of Gildan unlawfully as a basis for this requisition.
“But for the violation of the HSR Act, Browning West would not have held sufficient shares to exercise the right to requisition a meeting under Canadian corporate law,” Gildan said in the release. “The Company remains significantly concerned that the basis for Browning West’s Requisition — which they seek to use to take control of the Board — was founded on an illegality.”
Browning West is one of several Gildan shareholders that called for the reinstatement of Chamandy in the month following his abrupt departure. In response, Gildan issued a statement outlining its reasoning for Chamandy’s ousting, saying it uncovered information about an “undisclosed relationship” between Chamandy and a shareholder, one that it said was calling for his reinstatement. Chamandy said the board was working to undermine his reputation through “insinuation and distortion of the truth.”
In its own press release in response to this latest statement from Gildan, Browning West said it was disappointed in what it called “the Board’s continued attempts to distract shareholders by focusing on a U.S. regulatory question that is entirely irrelevant to our valid requisition under Canadian law.”
“Through its actions, including refusing to set a timely date for the Meeting, the Board is once again demonstrating a complete disregard for sound corporate governance and a total lack of respect for the will of shareholders,” Usman S. Nabi and Peter M. Lee of Browning West said in the release. “...It is clear to us — and presumably to all other Gildan shareholders — that setting a Meeting date nearly five months after receiving a valid requisition for a Special Meeting is a transparent attempt to buy time for a seemingly unqualified Chief Executive Officer with a record of value destruction and an entrenched Board.”
Vince Tyra stepped into the role of president and CEO earlier this month. In its special meeting announcement, Gildan said the scheduled date allows shareholders enough time to assess Tyra’s leadership of the company “so they can make the most informed decision about whom they assess is the best executive to lead Gildan.”
David Swartz, senior equity analyst for Morningstar Research Services, wrote in a stock analyst note prior to the latest round of statements that this kind of proxy battle was unheard of and could drag on for many months.
“We have no clarity on how this situation will end or how much damage could be inflicted,” Swartz wrote.
