The Gildan logo is seen outside their offices in Montreal on Dec. 11, 2023.Christinne Muschi/The Canadian Press
Glenn Chamandy put an enormous amount of imagination and energy into the Apes Hill golf resort in Barbados.
The championship-level course weaves through palm trees, deep gullies and coral rock outcroppings. Homes on the edge of the fairways cost up to US$7-million. The 19th hole, typically code for the clubhouse bar, is a funky island green in a small lake, called “The Last Laugh.” Golfers can fire a shot over water to break ties or make one last closest-to-the-pin wager.
After acquiring the 475-acre property in 2019, Mr. Chamandy told a golf magazine: “We want Apes Hill to take your breath away in many different ways – by being environmentally responsible, visually beautiful and authentically the best of Barbados.”
Creating a breathtaking golf experience is admirable. It’s also time-consuming. And that’s now an issue, because Mr. Chamandy built this award-winning development while also serving as chief executive officer at Gildan Activewear Inc. GIL-T
On Monday, one of the nastiest governance battles in recent memories got even uglier. In the face of growing institutional investor demands to reinstate Mr. Chamandy after he was terminated last month, Gildan’s board of directors detailed the reasons it pushed out the co-founder and 20-year CEO of one of the country’s most successful consumer product companies.
Gildan directors – all with significant public company experience – said they lost “trust and confidence” in the CEO of a company with a $7.25-billion market capitalization after it “had become clear that he had no credible long-term strategy and no vision for the future.”
The board highlighted Mr. Chamandy’s fixation with Apes Hill, saying “in his last few years, he gradually became more disengaged as CEO as he increasingly focused on outside personal pursuits, including the development of a golf resort in Barbados.”
In contrast, Gildan’s board said the former CEO never visited the company’s new manufacturing plant in Bangladesh, one of “our most significant investments.” Mr. Chamandy, according to the board, had not travelled to Bangladesh, where the bulk of Gildan clothes are manufactured, in more than a decade.
Stepping back from (delicious) details of this fight, it’s worth reviewing the Gildan board’s job. Directors at any public company are supposed to act in shareholders’ best interest by choosing a CEO and management team, monitoring their performance and planning for succession.
Based on everything disclosed to date, Gildan’s board did its job.
Monday’s letter shows Gildan directors struck a three-year succession plan with Mr. Chamandy in 2021. When he reneged on the agreement and instead pushed for several more years as CEO to acquire and integrate companies, the board terminated Mr. Chamandy. It brought in an experienced operator as the new boss – former Fruit of the Loom president Vince Tyra.
Investor outrage over the moves points to a breakdown in communications between Gildan directors and the shareholders they are meant to represent. It also points to something potentially more ominous. In Monday’s letter, Gildan’s board said it is investigating “Mr. Chamandy’s engagement with certain shareholders prior to his termination.”
The departure of a CEO is a material development at any public company. Anyone selectively sharing board discussion with a handful of investors could face significant issues with market regulators.
Boards part company with CEOs all the time. It’s unprecedented to see institutions such as Jarislowsky Fraser Ltd. and Turtle Creek Asset Management come out swinging in defence of Gildan’s former boss.
The Gildan board now faces an activist campaign. Last month, asset manager Browning West LP requested a special shareholder meeting to elect five new Gildan directors.
Gildan’s board is now fully on the offensive. In Monday’s letter, it said “Mr. Chamandy has spent weeks telling a false and misleading story about recent events at Gildan. Many well-intentioned investors have bought into that false story.”
This fight gets settled one of two ways. Either the board prevails, and Gildan gets a new CEO, or institutional investors reappoint Mr. Chamandy, and directors depart. Based on the damning disclosure in Monday’s board letter, it’s difficult to imagine how Gildan’s former CEO gets the last laugh.
Andrew Willis