Turtle Creek Asset Management, a Canadian independent investment management firm with a 25-year history and a decade-long shareholder of Gildan Activewear, Inc., is the latest Gildan investor to press the Gildan Board of Directors to reverse its decision to terminate company founder and former CEO, Glenn Chamandy and reappoint him as CEO of the company.

Gildan shares fell sharply on Monday after the company announced the termination of Chamandy, who co-founded the business with his brother in 1984, without explanation. Gildan said Vince Tyra, a longtime apparel industry executive, would succeed Cahmandy on February 12, 2024 (read SGB Media’s coverage here).

In a letter, Turtle Creek said that Chamandy was largely responsible for the growth of Gildan from a small family-owned business into a global apparel company with over US$3 billion in sales. The company pointed out that shareholders who purchased shares at the time of Gildan’s IPO in 1998 have been handsomely rewarded as Gildan’s share price has seen a 90-fold increase over the last 25 years.

Turtle Creek suggested in its letter that the Board’s abrupt termination of Chamandy appears to have been “conducted in great haste, without meaningful shareholder engagement and without considering the substantial adverse impact on Gildan’s business.” The letter said the Board “made a grievous error in terminating Chamandy and urged the Board to reverse the inexplicable, ill-conceived and value destructive decision” and reappoint Chamandy as CEO of the company.

The full text of the Turtle Creek letter is below.

The Turtle Creek action comes on the heels of a report from the Wall Street Journal that Browning West, a Los Angeles, CA-based hedge fund and longtime shareholder of Gildan Activewear, is also pressing the Gildan Board of Directors to reverse its move to oust the longtime CEO but is also asking for the removal of the Chairman of the Board, Donald Berg, and initiate a search for his replacement.

According to the WSJ reporting, Browning West reportedly holds a nearly 4 percent stake in Gildan.

Browning West reportedly also credits Chamandy with boosting the company’s profits in the mid-teens annually. The WSJ reported that the hedge fund’s letter indicates that it believes that Chamandy’s replacement as CEO, Vince Tyra, “lacks the skills needed for the job.”

The WSJ also reported that Browning West is “hoping to add its Co-Founder, Peter Lee, to Gildan’s board” and is prepared to exercise its shareholder rights, including calling a special meeting to reconstitute the Board, according to the letter from Browning West to the Board.

“We agree that succession should occur at Gildan, but it must be implemented thoughtfully and with relevant, well-defined criteria,” the Browning West letter reportedly said.

The Turtle Creek letter to Gildan Activewear’s Board of Directors reads as follows:

Dear Gildan Directors,

As you are aware, for over 10 years, Turtle Creek has been and remains an engaged, long-term shareholder of Gildan. We regard Gildan as one of Canada’s great success stories. Over the past 40 years, Gildan has grown from a small family-owned business into a global apparel company with over US$3 billion in sales. It has outcompeted and outlasted many other players in a challenging and competitive industry. This success is due in large part to the vision and leadership of its founder and longtime CEO, Glenn Chamandy. Shareholders who were astute enough to purchase shares at the time of Gildan’s IPO in 1998 have been handsomely rewarded– Gildan’s share price has seen a 90-fold increase over the last 25 years.

During our long participation as shareholders of the company, we have been impressed by Mr. Chamandy’s stewardship of the business, his strategic vision, his extraordinary knowledge of its competitive landscape, his extensive operational capabilities, and his relationships with key stakeholders and customers.

We were understandably dismayed by the Board’s abrupt termination of Mr. Chamandy, which we believe exposes Gildan to a significant loss of leadership, loss of institutional and operational knowledge, damages employee morale and potentially threatens key customer relationships.

Turtle Creek believes that succession planning is an important duty of the Board and should be conducted through a thoughtful and deliberate process, including through the engagement of the company’s existing leadership and its shareholders. In contrast, the Board’s abrupt termination of Mr. Chamandy, appears to have been conducted in great haste, without meaningful shareholder engagement, and without considering the substantial adverse impact on Gildan’s business.

Gildan is a uniquely successful company that requires uniquely qualified and experienced leadership. We strongly believe the Board has made a grievous error in terminating Mr. Chamandy. We urge the Board to reverse this inexplicable, ill-conceived and value destructive decision and reappoint Mr. Chamandy as CEO of the Company.

Sincerely,

Turtle Creek Asset Management Inc.

Photo courtesy Gildan Activewear. Shown Founder and former CEO, Glenn Chamandy