Former Gildan Activewear Inc. CEO Glenn Chamandy responds to questions during a news conference in Montreal on Feb. 5, 2015.Paul Chiasson/The Canadian Press
Gildan Activewear Inc. GIL-T says an independent governance expert’s report confirms company directors followed a proper process on succession planning that ended in the dismissal of then-chief executive Glenn Chamandy.
Montreal-based Gildan paid Richard Leblanc, one of Canada’s leading experts on corporate governance and accountability, to analyze whether its board followed “a good and rigorous process” in preparing successors for the CEO role leading up to Mr. Chamandy’s dismissal in December. His answer, contained in a 12-page report released by Gildan Wednesday: Yes.
“Based on my review, it is my opinion that the board acted in a manner consistent with prevailing standards of corporate governance for CEO succession planning, and the duties and obligations owed by directors to Gildan, during the time from May, 2021, to the letter of termination of the former CEO, dated Dec. 10, 2023,” Mr. Leblanc states in the report.
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Gildan, a maker of T-shirts and fleece, shocked investors when it announced Dec. 11 that it had dismissed Mr. Chamandy after a 40-year tenure at the company, the past 20 years as CEO. It named as his replacement former Fruit of the Loom executive Vince Tyra, who started last week.
The company has since become engulfed in an intense power struggle pitting Gildan’s board, which insists it was entirely justified in sacking Mr. Chamandy, and several major shareholders pushing for his return. Those shareholders say the board failed in its duties because it abruptly terminated a proven CEO and installed a replacement who’s not qualified for the job.
Led by U.S. hedge fund Browning West, nine dissident investors holding an estimated 35 per cent of Gildan’s stock have called publicly for Mr. Chamandy’s reinstatement. They say the executive has delivered solid returns for them and should have been heavily involved in the succession process.
The board says the current situation could have been avoided, but Mr. Chamandy refused to co-operate in a smooth transfer of leadership.
Browning West, which holds a roughly 5-per-cent stake in Gildan, has made a formal request asking the company to call a special meeting of shareholders to elect a new board. The firm has denounced what it calls an “absurd level of expenditure” by Gildan to fight its own shareholders, including hiring at least three law firms, two investment banks and a private investigator.
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Mr. Leblanc says in the report that he was provided with a series of documents he consulted to reach his conclusion, including the minutes of in-camera sessions of board meetings.
He said Gildan’s independent directors approached CEO succession planning as early as May, 2021, giving themselves enough time to find the right successor to Mr. Chamandy. He says they and the board chair worked co-operatively with Mr. Chamandy in laying out their expectations and took “all reasonable steps” to ensure the board had viable internal candidates who were CEO-ready while also hiring an executive search firm to hunt for outside candidates.
Gildan on Tuesday released a timeline of events leading up to Mr. Chamandy’s removal. It says that during the board meeting of May, 2021, the then-CEO informed directors that he planned to retire within three to five years. It says that was followed by another meeting in December, 2021, at which chairman Donald Berg and Mr. Chamandy agreed to a formal succession process that would have seen him stepping down as CEO in December, 2024, and leaving the company following a reasonable transition period with the new CEO.
“Mr. Chamandy agreed to that plan,” Gildan said. “Mr. Berg and Mr. Chamandy then discussed the CEO succession plan in most of their quarterly feedback meetings and communications over the next two years.”
That doesn’t square with Mr. Chamandy’s own version of events.
In an interview with The Globe and Mail a few days after he was let go, he said he was “not involved in this” CEO succession process. He said there was no intent to replace him until this past summer, when the company accelerated the process and told him that they were going to look for an outside candidate.
“I never had an intention to leave the company,” Mr. Chamandy told The Globe. “I never gave any hints that I was interested in retiring from the company. On the contrary, I always told the board that I’m here forever and, you know, it’s not something I’m planning to do. I’m 100-per-cent committed.”
Nicolas Van Praet