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Glenn Chamandy, seen here in 2015, has left his positions as CEO and board member of Gildan Activewear, the company said in a statement.Paul Chiasson/The Canadian Press

Gildan Activewear Inc. has dismissed its chief executive and co-founder Glenn Chamandy after a 20-year tenure, an unexpected move tied to a clash over succession planning.

Mr. Chamandy, who has led Gildan as chief executive since 2004, has left his positions as CEO and board member, Montreal-based Gildan said in a statement Monday. He will be replaced in February by former Fruit of the Loom executive Vince Tyra while current Gildan director Craig Leavitt acts as interim CEO, the company said.

Shares in the maker of T-shirts and socks tumbled 10 per cent to $44.34 in afternoon trading on the Toronto Stock Exchange. They had rallied 35 per cent over the past 12 months before the announcement.

For any founder-led company, the transition to a management-led company is always tricky, Gildan chairman Donald Berg said in an interview. He said the board hatched a succession plan about 2½ years ago in which Mr. Chamandy was initially involved.

“As we got closer and closer to what we had understood the transition date to be, we went out and started doing a search process” for a new CEO that included internal and external candidates, Mr. Berg said. They landed on a replacement in Mr. Tyra but didn’t see eye to eye with Mr. Chamandy on the timing of a handover, he said.

“We spent the last number of weeks, and as recently as up to yesterday, trying to work through that and get alignment. And unfortunately, it just didn’t happen,” Mr. Berg said.

“We really feel comfortable about the company and where it is and how it can perform,” Mr. Berg said. “What the conversations, quite honestly, were about, was ‘We’re in a very strong place for the next couple of years. How do we figure out what comes after that?’ … It was our view that as you thought further out for the company, it was time that whoever was going to have to live with those decisions should be making those decisions.”

In its statement, Gildan said Mr. Chamandy has been a forerunner in the apparel industry, taking Gildan from a small family-owned business to a leading company with more than US$3-billion in revenues. It thanked Mr. Chamandy and wished him well.

Mr. Chamandy issued a separate statement on his own behalf, saying he was told by the chairman on Sunday that his employment was being terminated without cause. He stands to make US$20-million under the terms of his payout, according to company filings.

“It is unfortunate that my vision of the path forward has differed from that of other board members,” Mr. Chamandy said, noting the company has flourished under the family’s guidance. He declined to provide further clarification when reached via email.

Gildan makes and markets activewear clothing. Its main business is manufacturing “imprintables” – basically blank T-shirts, sport shirts and fleeces used to make specialized apparel such as children’s softball team jerseys. It also sells clothing under the Gildan and American Apparel brands.

The company was founded in 1984 in a small shop in Montreal by Mr. Chamandy and his brother Greg, whose family has deep roots in the city’s garment trade. They bought a knitting mill to supply fabric for their childwear business, Harley Inc., which eventually became Gildan.

At the close of trading last Friday, Gildan had a market capitalization of $8.5-billion.

“While the CEO change comes as a surprise, we expect Gildan’s strategy to remain intact, and we believe Gildan remains well-positioned to execute,” BMO Capital Markets analyst Stephen MacLeod said in a note to clients. The company is well-positioned to face near-term headwinds and leverage its low-cost position to aggressively pursue market share, he said.

Canadian pension fund giant Caisse de dépot et placement du Québec last year divested its stake in Gildan, one of its top 20 Quebec-based holdings at the time, amid criticism the clothing maker wasn’t paying its fair share of tax. The company has also been a target of activists questioning its labour practices at factories in Honduras and Haiti.

Gildan vowed in its statement to push on with its existing strategy, building on its strength in large-scale, low-cost, vertically integrated manufacturing. The board is confident that Mr. Tyra is the right person to lead the company into the next stage of its evolution and growth, Mr. Berg said.

Mr. Tyra previously led apparel supplier alphabroder, Gildan’s biggest distributor customer, tripling the company’s revenue during his six years as CEO. Before that, he was president of Fruit of the Loom, leading a turnaround of the company that ended in its sale to Berkshire Hathaway. He was most recently senior vice-president of corporate strategy and mergers and acquisitions at Houchens Industries.

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