Dive Brief:
- Gildan Activewear will replace five independent directors on its board, effective May 1, as part of a “board refreshment” strategy to “support CEO Vince Tyra,” according to a Monday news release.
- The company said the new board will “ensure the previously announced sale process is conducted in a manner that will benefit all shareholders of Gildan,” and that a near-term board refreshment was in the best interests of the company. It doesn’t anticipate any updates on the sale process before the annual meeting on May 28.
- In addition, Gildan is recommending two board nominees set forth by activist investor group Browning West. LP. Gildan and Browning West have been in an ongoing proxy battle since Gildan fired former CEO Glenn Chamandy in December 2023.
Dive Insight:
Gildan’s move to change the board is an attempt to show dissident investors that it is compromising to a point, a common tactic in a proxy battle, David Swartz, senior equity analyst at Morningstar Research Services, wrote in an email to Fashion Dive.
The new directors are Tim Hodgson, Lee Bird, Jane Craighead, Lynn Loewen and Les Viner. They take the places of Donald Berg, Maryse Bertrand, Shirley Cunningham, Charles Herington and Craig Leavitt. There are 12 members of the board.
Members of the special committee supervising the sale process, Luc Jobin and Chris Shackelton, will continue their roles to help with the transition, per the release, but they will not stand for re-election at the 2024 Annual Meeting.
Hodgson is nominated to chair the board, replacing Berg. Swartz said it’s notable that Berg is being replaced because he was one of the directors specifically criticized by Browning West. The investor group previously called for Berg’s resignation along with Chamandy’s reinstatement.
“It’s a partial admission by Gildan that its board needed changes,” Swartz said. “Ultimately, though, the moves are designed to protect Tyra’s position as CEO and prevent a board takeover by Browning West. I don’t think that BW or most of the other dissident shareholders will be mollified by these board changes since they have been adamant that Chamandy should be reinstated as CEO.”
In its own press release about Gildan’s board changes, Browning West said the board’s “list of failures grows by the week.”
“The most glaring omission in the Board’s latest maneuver is its failure to reinstate Glenn as CEO and its unwavering commitment to Vince Tyra — including from new directors — despite his record of value destruction and poor personal judgment,” Usman S. Nabi and Peter M. Lee of Browning West said in the release. “The reinstatement of Glenn has been a central and consistent demand from an unprecedented mass of shareholders, which the Board refuses to acknowledge in favor of its own interests. It is also clear that the newly announced directors are objectively less qualified than Browning West’s director candidates, who possess best-in-class track records of value creation and relevant experience. “
Gildan is endorsing the addition of Karen Stuckey and J.P. Towner, two of Browning West’s recommendations to its board, but said it doesn’t believe “the rest of Browning West’s slate offers an increase in expertise or experience to Gildan’s business, and accordingly, they do not represent the best mix of Director candidates.”
The announcement comes a week after Tyra set his strategic priorities for Gildan, and the company released anticipated Q1 revenue of $695 million, a 1% year-over-year decrease.
