Gildan Activewear has set a special shareholders meeting for May 28 to vote on a request to replace the majority of the clothing maker’s board, frustrating some shareholders who were pushing for an earlier meeting.

It’s latest development of an increasingly bitter activist investor campaign.

The meeting stems from a shareholder requisition from investment firm Browning West, and it’s expected to serve as a vote on whether to reinstate ousted and embattled CEO Glenn Chamandy.

“Browning West is asking Gildan shareholders to vote to remove the majority of Gildan’s directors and replace them with Browning West’s eight nominees with the intention that those nominees will reinstate Glenn Chamandy as CEO,” Gildan said in a written statement.

Chamandy was let go by Gildan’s board of directors in early December and replaced with Vince Tyra. Chamandy maintains he was ousted without cause and a number of Gildan investors have since called for him to be reinstated.

Shareholder response

In a statement, Browning West said it called for a March date for the special meeting, and argued Gildan’s board is “demonstrating a complete disregard for sound corporate governance” by setting a late May date for the meeting.

“It appears the board has learned nothing from its recent string of ill-conceived decisions and publicity stunts, which seem to have only succeeded in alienating shareholders,” Usman S. Nabi and Peter M. Lee of Browning West said in a written statement.

“Indeed, it is as if the board is oblivious to the fact that holders of approximately 35 per cent of Gildan’s outstanding shares publicly support our campaign and efforts to expeditiously reinstate Glenn Chamandy as Chief Executive Officer.”

Turtle Creek Asset Management also expressed frustration with the late May meeting date.

“Despite numerous requests from shareholders to hold the special meeting without delay, the board has decided to call a combined annual and special meeting nearly a month later than its usual timing,” the firm’s statement reads.

“Rather than call the meeting within two or three months, the board appears determined to frustrate and delay shareholders’ ability to hold it accountable.”

‘Unique situation’

David Swartz, senior equity analyst with Morningstar Research Services, told BNN Bloomberg that he’s never seen an activist campaign quite like the one currently playing out at Gildan.
“I've seen a lot of activist campaigns to try to fire CEOs, but this is the first one I've ever seen where activists actually band together to bring back a CEO who had already been fired,” he said.
“This is a completely unique situation.”

The board has consistently defended their decision to remove Chamandy as CEO despite ongoing pressure from some shareholders, and Swartz said that isn’t likely to change.

“Certainly the board will not rehire Chamandy … the board has made it very clear that there's a huge division between how it sees the future of Gildan and Chamandy’s vision and there is no way that they can reconcile,” he said.

Gildan said a “special committee of directors,” made up of a majority of directors not targeted by Browning West, made recommendations on Browning West’s requisition.

The company said that it set the May meeting after numerous shareholders expressed interest in holding a spring meeting to “limit disruption” to the business.

“The selected meeting date will provide shareholders with an opportunity to assess CEO Vince 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,” the company said.

Browning West argued that if the board was interested in a speedy resolution, it would agree to the March date.

“The board has acknowledged in its own press release that it agrees with the view of a critical mass of shareholders that a speedy resolution of the current situation is in the company’s best interest, which is precisely what a more urgently called special meeting would provide,” the statement reads. 

Swartz said there’s “a chance” that the majority of Gildan’s board will be voted out at the meeting, paving the way for Chamandy’s return, however he said it would it would be an “extremely strange” way for the saga to end.

Swartz noted that the meeting is still a number of months away, and Chamandy’s successor will be able to use that time to communicate his vision for Gildan and try to win over shareholders.