Browning West letter to Gildan Activewear Inc
$GIL
December 20, 2023
Gildan Activewear Inc.
600 Maisonneuve Blvd W #3300
Montreal, QC H3A 3J2
Attn: The Board of Directors
Members of the Board of Directors,
Browning West, LP (together with its affiliates, “Browning West” or “we”) is an investment management firm with a long-term investing horizon that owns approximately 4.8% of Gildan Activewear Inc.’s (“Gildan” or the “Company”) outstanding common shares, making us one of the Company’s largest shareholders. While we recently demonstrated our confidence in Gildan by increasing our ownership stake, the poorly-aligned Board has spent the past 10 days initiating a blatant entrenchment maneuver with a lone shareholder while showing a complete lack of regard for the broad and unprecedented shareholder opposition to the Board’s actions. Since the publication of our December 14th letter, eight shareholders, who collectively own more than 33% of the Company’s outstanding shares, have publicly echoed Browning West’s concerns. These investors are some of the Company’s longest-tenured shareholders and have a deep understanding of the business. We also have reason to believe there are many other shareholders who share our concerns but have yet to express them publicly. With each passing day, the Board’s apparent arrogance and indifference validate that substantial change is urgently needed in Gildan’s boardroom.
Today, we are writing to urge you to implement the three following concrete actions, which create the best path forward for stakeholders:
1.
Reinstate Glenn Chamandy as CEO;
2.
Remove Donald Berg as Chair, and;
3.
Appoint Browning West Co-Founder Peter Lee as a shareholder representative to the Board.
If you continue to ignore the feedback of more than 33% of shareholders, Browning West is fully prepared to requisition a Special Meeting of Shareholders to hold the Board accountable for its actions and prevent the further destruction of value.1 Shareholders will not tolerate the Board doubling down on its poorly conceived succession and its backroom deal in exchange for an individual investor’s support.
To disregard shareholders and employees at this critical juncture would only further tarnish the Board’s reputation and demonstrate its utter lack of respect for sound corporate governance. Consider the following:
- Gildan Shareholders Have Spoken by Publicly Echoing Browning West’s Concerns: A critical mass of shareholders have signaled their alignment by publicly echoing our concerns and calling for the Board to reinstate Mr. Chamandy as CEO. Following our December 14th letter to the Board, investors that include Browning West LP, Jarislowsky Fraser Ltd., Cooke & Bieler LP, Pzena Investment Management, LLC, Turtle Creek Asset Management Inc., Janus Henderson, Oakcliff Capital and Anson Funds have publicly called for the Board to reappoint Mr. Chamandy as CEO. These shareholders, who represent over 33% of Gildan’s outstanding shares, have taken it upon themselves to ensure their respective voices are heard in seeking to protect the long-term value of Gildan and the interests of all stakeholders. These voices are in addition to numerous shareholders who we understand share these concerns, but have not yet spoken publicly.
- Gildan Employees Have Also Spoken by Selling Substantial Amounts of Stock: Recent substantial share sales in excess of $11.7 million by senior executives signal a lack of confidence in the Board and suggest that employees fear Vincent Tyra’s appointment may lead to the further destruction of shareholder value. These sales also increase the risk of management turnover. Over the past week, multiple senior executives have made substantial share sales: CFO Rhodri Harries sold $6.8 million in Gildan shares; President of Manufacturing Benito Masi sold $4.1 million in Gildan shares; President of Sales, Marketing and Distribution Chuck Ward sold $702,000 in Gildan shares; and SVP of Sales North America Michael Schroeder sold $104,000 in Gildan shares. Although Gildan’s senior executives cannot share their views publicly, they are clearly voting with their wallets.
The Board’s “check-the-box” outreach to us this week has been wholly unsatisfactory because it failed to address our substantive concerns on succession planning and Mr. Tyra’s extremely poor track record. It is, however, noteworthy that in all our conversations with Mr. Berg, he told us that Mr. Chamandy has the “highest integrity.” We understand that other major shareholders remain deeply troubled by the Board’s ever-evolving and illogical explanations for its botched CEO succession process.
The unprecedented nature of the public shareholder outcry and the stock sales of senior executives are evidence enough that the Board should immediately meet our three demands. We will not hesitate to hold the Board accountable for further delay in rectifying this unfortunate situation – of which the Board’s actions are the sole cause.
Sincerely,
Usman S. Nabi Peter M. Lee
Source:
https://www.sec.gov/Archives/edgar/data/1061894/000092189524000066/ex992to13d12418013_01082024.htm