Glenn Chamandy is back on Gildan board after estimated $65-million proxy battle

Glenn Chamandy is back as chief executive of Gildan Activewear Inc. GIL-T, supported by a new board eager to close the door on five months of turmoil that left employees shaken and the company holding the bag on tens of millions of dollars worth of expenses.

Shareholders of the Canadian T-shirt maker on Tuesday voted overwhelmingly to give Mr. Chamandy his board seat back, which followed his reappointment as CEO three days ago. He’ll join seven other directors, all candidates put forward by activist investor Browning West, which has taken control of the company after winning a feud with Gildan’s previous board over Mr. Chamandy’s leadership.

United Rentals Inc. CEO Michael Kneeland is now Gildan’s chairman.

“Justice has prevailed,” a smiling Mr. Chamandy told reporters during a news conference after Gildan’s annual meeting in Montreal. “It was quite stressful for me, my family. It was very stressful, I think, for the employees of the company. … We’ve got to turn the page and move on.”

A raucous battle that engulfed the clothing maker for nearly half a year came to a sudden conclusion last week, when Gildan’s entire board of directors and former CEO Vince Tyra quit. The resignations happened after shareholder votes cast ahead of the annual meeting were counted and the board realized it had no path to victory – Browning West’s slate of directors had amassed more than enough support.

The legacy board fired Mr. Chamandy in December over what it said was his refusal to comply with a succession plan to which he had agreed. Directors later blasted him for his work ethic and lack of ideas and said they tried to reach a compromise with him right up until the announcement of his termination.

But they failed to convince investors there was a good reason to show him the door. A rebellion swelled up soon after, with nine dissident investors holding an estimated 35 per cent of Gildan’s stock calling for Mr. Chamandy to be reinstated.

Gildan’s new board has started to tally the expenses incurred in the proxy fight, including fees to pay lawyers and other advisers as well as severance for departed executives. That includes Mr. Tyra, who started as Mr. Chamandy’s replacement in January, and Arun Bajaj, Gildan’s former chief human resources officer.

Preliminary estimates put the total cost at US$65-million or more, according to Mr. Chamandy.

At Gildan, a board’s defeat offers lessons in shareholder management

By comparison, Walt Disney Co. DIS-N last month won a high-profile proxy battle with activist investor Nelson Peltz and spent about US$40-million on the effort, in which CEO Bob Iger rallied the support of Star Wars creator George Lucas. Disney, however, is several times the size of Gildan as measured by revenue and market capitalization.

Mr. Chamandy vowed Tuesday to buy back into Gildan after selling his sizable stake. And he said he’s proud to be in Quebec, saying Gildan’s headquarters will “definitely” remain in the province for the foreseeable future.

He also extended an olive branch to the Caisse de dépôt et placement du Québec. Gildan wants the pension fund giant as a long-term shareholder, he said.

The Caisse used to be one of Gildan’s largest investors but sold its stake in 2022 over disagreements about the company’s tax strategy. The Caisse last month announced it would lend Gildan $200-million – money that came with an endorsement of Mr. Tyra and the legacy board, but Mr. Chamandy seems ready to overlook that.

Meanwhile, a shareholder proposal asking Gildan to assess the effectiveness of its “human-rights risk infrastructure” in light of the closing of its San Miguel factory in Honduras last year was voted down at the annual meeting. But an exact tally of shareholder support wasn’t immediately available. If a sizable proportion of investors backed the proposal, that would send a signal to Gildan that the issue needs to be addressed further.

The proposal follows complaints from factory workers in Honduras, which were recently documented in The Globe and Mail. One worker, Rosa Dalila López Corea, described long workdays – 11½ hours curled over a sewing machine – and debilitating production quotas that she says have left her with chronic injuries in her shoulders, arms and hands.

Mr. Chamandy defended the company’s record on working conditions and employee treatment.

“We’re very comfortable” that Gildan is managing reputation risk on labour, he said. “We have 44,000 employees in the company. And trying to pick out an ex-employee that comes up and comes up front is not representational really of the truth, of the Gildan conditions. We’ve been very fortunate over time, I think, to have best-in-class working conditions in our facilities.”

Asked whether he ever thought of just walking away from the proxy fight and doing something else, Mr. Chamandy said no because he didn’t want to see the company his family founded “go into a tailspin.” Mr. Kneeland said there is no set time limit on Mr. Chamandy’s rebooted leadership, though rough market guidelines would suggest a term of three to five years.

“Listen, I’m going to be CEO until I think the time is right,” Mr. Chamandy said. “I would like to be part of the company as long as possible.”