Gildan sets date for shareholder vote on board for late May

Clothing maker Gildan Activewear Inc., caught in a dispute with investors over the firing of its chief executive officer, set May 28 as the date for shareholders to vote on whether they want a new board. 

Gildan’s board has been under pressure since it sacked CEO Glenn Chamandy in December, to the dismay of a number of large investors who wanted him to stay. Los Angeles-based Browning West LP, a Chamandy ally, is now organizing a campaign to replace most of the directors. 

About three weeks ago, Browning formally requested that the company hold a special shareholder meeting “without delay” to vote on its proposed slate of eight new board members. Instead, Gildan’s board is now saying it intends to combine that with the company’s regular annual meeting, nearly four months from now.

A meeting in late spring gives shareholders “a reasonable period of time” to evaluate Browning West’s plans and to assess the strategy of new CEO Vince Tyra, who took over earlier this month, Montreal-based Gildan said in the statement.

Also on Monday, Gildan filed a court application against Browning West in a Quebec court. 

The court filing argues that the hedge fund broke US law when it rapidly increased its stake in Gildan from 3.9% to around 5% without prior notice to regulators — 5% is the threshold that gives an investor the right to requisition a special shareholder meeting under Canadian corporate law. 

If Gildan wins its case, it would give the company the right to cancel the special meeting, though Browning West can still try to get its director candidates elected at the annual meeting. Gildan, which owns the American Apparel brand, asked the court to rule by May 17.

“Rather than call the meeting within two or three months, the board appears determined to frustrate and delay shareholders’ ability to hold it accountable,” Toronto-based Turtle Creek Asset Management, which is supporting Browning West, said in a written statement. “The board’s tactics are just another slap in the face of Gildan’s long-term shareholders.”

Browning West did not provide a response to a request for comment.