By
Bloomberg
Published
May 29, 2024
The proxy fight at Gildan Activewear Inc. cost the company $65 million including severance and legal expenses, its chief executive officer said, putting it in the same league as Walt Disney Co.’s battle with Nelson Peltz.
The five-month scrap between Gildan’s board and investment firm Browning West LP ended last week with the resignation of the entire board, including then-CEO Vince Tyra. Investors supported dissident shareholder Browning in its quest to install eight of its own board candidates and bring back longtime CEO Glenn Chamandy, who’d been fired in December.
The clothing manufacturer is “turning the page,” Chamandy said Tuesday, and is focused on implementing a plan that he and Browning West unveiled in March — taking on more debt, buying back shares and trying to grow in higher-end segments of casual apparel. Gildan is likely to tap the bond market at some point, he said in an interview on BNN Bloomberg Television.
“Right now, the company has been operating at a very conservative balance sheet — probably too conservative,” Chamandy said. “We’re running at about 1.5 times leverage. We think we can take that up to two times leverage and still be very conservative in terms of our assumptions and our debt leverage.”
Chamandy and Browning have set ambitious, and very specific, targets — to boost the stock price to $60 by the end of next year and to $100 within about five years. It closed at $37.19 on Tuesday in New York, slightly higher than it was on the last trading day before he was sacked.
In a news conference after the company’s annual meeting in Montreal, Chamandy said Browning West’s slate had received “overwhelming support” from shareholders. He said was saddened by the former board’s action and described the experience as very stressful for Gildan employees.
“Justice has prevailed,” he said.
Chamandy ran the company for decades — first with his brother Greg, and then as sole CEO since 2004. His succession had become a point of conflict with the former board, which at one point described him as “a founder CEO whose ego will not allow him to transition out of the company gracefully after 20 years at the helm.”
“I’m going to be CEO until the time is right to make a proper succession,” Chamandy, who’s in his early 60s, told reporters.
Michael Kneeland, the newly elected board chair, said the search for an eventual replacement won’t have a firm time limit. “You can’t put timeframes,” he told reporters, but suggested that three to five years is the right range.
Disney shareholders last month rejected Peltz’s bid for a board seat. In a filing, the entertainment company said it expected to spend $40 million on the proxy contest. Peltz’s Trian Fund Management planned to spend $25 million, while another dissident shareholder group had budgeted millions more.
A spokesperson for Browning West said the firm declined to comment on how much it spent on the Gildan contest.