Glenn Chamandy following the apparel manufacturer's annual meeting on Feb. 5, 2015 in Montreal. Recent correspondence provides more insight into the clash behind the scenes in the weeks leading up to Mr. Chamandy’s sacking on Dec. 11.Paul Chiasson/The Canadian Press
Then Gildan Activewear Inc. GIL-T chief executive Glenn Chamandy accused the Canadian clothing maker’s board of holding an “untenable position” in failing to disclose its intentions on a possible CEO change ahead of his controversial ouster earlier this month, according to a confidential letter he sent to the company chairman in late November.
In a Nov. 25 missive sent to Gildan Chairman Donald Berg seen by The Globe and Mail, Mr. Chamandy said he made a proposal for senior executive leadership transition and succession development on Aug. 18 that was subsequently rejected by the board. Directors, he said, were already moving to recruit a new CEO with a headhunting firm and wanted him out by the end of 2024.
“In as much as this was puzzling and surprising, the position taken by the board as regards the need for my employment to end in the near term and a move to a change of leadership could not have been clearer,” Mr. Chamandy wrote. “The level of my support for the board’s plan did not appear to have any real importance.”
The correspondence provides more insight into the clash behind the scenes in the weeks leading up to Mr. Chamandy’s sacking on Dec. 11 – a dismissal now being contested by several big Gildan shareholders demanding his reinstatement. While the board insists it did the right thing, at least two investors have vowed to call a meeting to vote out the Gildan board if directors don’t reverse their decision.
As Mr. Chamandy tells it, by late November the board was already in advanced negotiations with a potential new CEO and determined to push him out, while forcing him to continue to carry out his duties as if nothing was amiss. “It is an untenable position on your part to allow our shareholders, prospective shareholders and important stakeholders to be continuing to operate under the assumption that I am the continuing CEO,” he wrote.
Gildan directors see it differently. In an open letter to investors this week, board members explained that they gradually lost faith in Mr. Chamandy’s ability to deliver future growth. Directors said he sought to entrench himself as CEO while the board worked to implement a “planned, deliberate and professionally run” succession process.
They said it was Mr. Chamandy who walked away from that in the end.
What had been a slow unravelling of trust and confidence in Mr. Chamandy over the past two years came to a head on Oct. 31. That’s when the then CEO, whose family founded Gildan, was given the opportunity to present his vision of the future of the company to the board during a meeting in Barbados.
At that gathering, Mr. Chamandy spoke about how Gildan would address emerging challenges to the business and he championed what he called a “forward integration” strategy based on two major takeover opportunities, according to the letter and other documents related to the standoff. He also laid out his view for how a succession plan should work with his proposed strategy.
Directors were stunned and troubled by the presentation, both in terms of its lack of detail and the leadership proposed to carry it out. Director Luc Jobin told reporters this week that Mr. Chamandy’s acquisition proposals were highly risky and demanded major additional analysis before being approved. The strategy was “a very high-wire act” that would be difficult to achieve, he said.
Mr. Chamandy wanted to get going on the deals within weeks, Mr. Jobin said, and saw himself as the person to lead all the combined operations over several years. It was, Mr. Jobin said, an ultimatum: “Do this or I leave the company.”
Mr. Chamandy has since denied making any such ultimatum. He was not reachable for comment Thursday.
At the time, his letter to Mr. Berg shows he was growing impatient for an answer.
“On November 7th, you contacted me in order to advise me that the board was still considering the situation, taking longer than planned coming out of the October 31st meeting,” Mr. Chamandy wrote. He called it “nothing other than an insincere delaying tactic,” because the board was in advanced talks with the CEO candidate and wanted him gone.
“I cannot possibly be expected to continue to carry out my duties as CEO in the face of these facts and this kind of treatment – the clarity of your intent and its impact on my credibility makes this abundantly clear,” Mr. Chamandy said in his letter. “To make matters worse, you are trying to manoeuvre me into forced co-operation, so that you can ‘have your cake and eat it too’ at my expense.”
Mr. Chamandy ends his letter by saying the board has, without his involvement, chosen a path that he believes will destroy shareholder value “and put the company at risk.” He calls on the chairman to get back to him quickly and propose “corrective action” so that the two sides can see whether there’s any hope of reaching an agreement before the opening of markets on Monday, Nov. 27.
Two weeks later, Mr. Chamandy was let go. Gildan has named Vince Tyra, a former executive at underwear maker Fruit of the Loom, as his replacement.
Nicolas Van Praet