Turtle Creek Asset Management Reiterates its Call to the Board of Gildan Activewear to Immediately Re-Appoint Glenn J. Chamandy as its CEO
Turtle Creek Asset Management Inc. ("Turtle Creek"), a Canadian independent investment management firm with a 25-year history and a decade-long shareholder of Gildan Activewear Inc. (GIL: TSX and NYSE) ("Gildan" or the "Company"), today issued a second letter to the board of directors (the "Board") of Gildan urging it to reverse its termination of Glenn Chamandy and reappoint him as CEO of the Company.
The full text of the letter to the Board follows:
The Board of Directors of Gildan Activewear Inc.
c/o Donald Berg, Chair of the Board and Arun Bajaj, EVP, Chief HR Officer & Legal Affairs
600 de Maisonneuve Boulevard West, 33rd Floor
Montréal, Québec, H3A 3J2
Via email
Dear Gildan Directors,
We appreciated the opportunity to meet with directors Donald Berg, Maryse Bertrand and Luc Jobin on Monday, December 18th to discuss the Gildan board of directors' approach to succession planning, the circumstances around Mr. Chamandy's termination, and the Board's pursuit of an agreement with Coliseum Capital Management.
In our letter of December 14th, we described our dismay over the events surrounding Mr. Chamandy's termination that we believe expose Gildan to significant risks, including a loss of essential leadership, damaged employee morale, and threatened key customer relationships. Having had the opportunity to reflect and deliberate on what we heard during our meeting with you, we remain convinced that Mr. Chamandy must be reinstated as Gildan's Chief Executive Officer and as a director. In fact, we are so disturbed by the Board's actions and its conduct that we now believe a significant reconstitution of the Board is essential.
Faced with an unprecedented outpouring of shareholder opposition to the Board's reckless and ill-conceived termination of Mr. Chamandy, the Board issued no public statements and ignored requests for further meetings with shareholders to explain its rationale. Instead, the Board concocted a new narrative surrounding Mr. Chamandy's termination that it disseminated via a press release and media interviews late Sunday. But not before it further confounded and alienated Gildan's long-time shareholders by entering into a hasty, secret agreement with a relatively short-tenured hedge fund shareholder in a bald-faced attempt to further entrench themselves by trading a Board seat for voting support. Adopting defensive entrenching measures to protect the Board is at odds with its duty to act as responsible and independent fiduciaries for all shareholders.
We spent nearly an hour and a half meeting with your representatives on December 18th. We earnestly, and with an open-mind, attempted to understand the timeline and reasons behind Mr. Chamandy's termination. At the end of our meeting, we asked a simple question: When we spoke with Mr. Berg last Monday, why had he not highlighted to us the Board's issues with Mr. Chamandy's acquisition strategy? Mr. Berg responded that the termination arose from a dispute over the timing of when Mr. Chamandy would leave the CEO role, and not a dispute over acquisitions. We left the meeting shocked.
We have been equally alarmed at the Board's demonstration that it is willing to go to any length, including distorting Mr. Chamandy's stellar track record of value creation for shareholders, in order to justify the Board's hasty, ill-conceived and value destructive decision to terminate him. It is clear to us that this is an example of a succession strategy that was haphazardly implemented and blindly pushed along.
We have met with representatives of the Board a number of times over the years. At no point were concerns raised about Mr. Chamandy and his performance at the firm he co-founded and led for over 20 years, a firm that is one of Canada's great success stories. A founder/CEO who has presided over a 90-fold increase in share price over 25 years deserves to be treated with respect. Quite frankly, if Mr. Chamandy needed more time to make certain that Gildan was on a solid footing to ensure its success for another 25 years, then he should have been given the time.
As shareholders of the Company with a substantial investment in its success, we demand the Board immediately reappoint Mr. Chamandy as CEO and a director. In addition, in order to halt the Board's continued destruction of value, we intend to seek the most expeditious opportunity to significantly reconstitute the Board through all means available to us as shareholders.
Sincerely,
Turtle Creek Asset Management Inc.
About Turtle Creek Asset Management Inc.
Turtle Creek is an independent investment management firm with a 25-year history. We manage over $5 billion for a clientele of high-net-worth families, institutions and wealth advisors. Turtle Creek is not your typical value investor. We are engaged shareholders focused on the long term. Turtle Creek is where the partners and our senior employees have all of their investable wealth. As a result, we are aligned with our fellow investors to an extent that few other firms can match.
This press release does not constitute a solicitation of a proxy within the meaning of applicable laws, and accordingly, Gildan shareholders are not being asked to give, withhold or revoke a proxy.
For further information, please visit: https://www.turtlecreek.ca/
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