In disagreement with the board of directors of Gildan, the long-time big boss of the Montreal manufacturer of clothing, socks and tights, Glenn Chamandy, was shown the door on Sunday. A sudden departure which plunges the company into a transition period which will last several months.
Gildan co-founder Glenn Chamandy, 61, had led the company since 2004 and served on the board of directors since 1984.
He will be replaced as CEO by Vince Tyra effective February 12. Until then, the interim will be held by a member of the council, Craig Leavitt.
Everything indicates that the board of directors wanted to move forward with its succession plan even though Glenn Chamandy was not ready to leave.
In an interview with La Presse, the chairman of the board, Donald Berg, explains Glenn Chamandy’s departure by differences on “a few aspects”, but the main one being the timing of the implementation of the company’s succession plan. “Organizing a transition with a founder is always a tricky thing,” he says.
“We think we’ve found the right person [Vince Tyra] and it’s the right time,” says Berg.
Donald Berg said he tried to reach an agreement with Glenn Chamandy on when he would retire in order to achieve a smooth transition. “It just wasn’t possible. »
Glenn Chamandy said Monday that he was not granting an interview, but indicated that the company was terminating his employment contract “without cause.”
As stipulated in his contract, Glenn Chamandy will receive a severance package valued at approximately US$20 million. He also owns 3.4 million shares, the equivalent of a 2% stake.
“It is regrettable that my vision for the future differs from that of the other members of the board of directors,” says Glenn Chamandy in an electronic communication.
It is possible that Glenn Chamandy had a disagreement with the board over the selection of his successor, according to CIBC analyst Mark Petrie.
“Given Glenn Chamandy’s history with the company and its many long-time executives, I suspect he would have favored an internal candidate,” says this expert. This departure is a surprise and undoubtedly a shock for the organization. »
It is not impossible, according to Mark Petrie, that personnel changes will follow within the company.
The 11% drop in Gildan shares during the first trading session of the week demonstrates the impact of the announcement.
For his part, analyst Martin Landry, from the firm Stifel/GMP, is surprised by the apparent haste with which Glenn Chamandy is dismissed and with which a succession plan is put in place given that there is no has had no recent missteps to report and that there have been no problems, to its knowledge, that would justify such a “radical” decision.
“The departure of Glenn Chamandy is a loss as he was the heart and soul of Gildan for over 30 years, having executed an impressive organic growth strategy creating significant shareholder value,” comments Martin Landry.
“Although there is never a good time to leave, Gildan is in a good position both financially and strategically,” he nevertheless emphasizes.
Martin Landry considers the departure of Glenn Chamandy as a negative element because he is notably the cornerstone of the establishment of the Gildan manufacturing center in Honduras. “He also had a depth of industry knowledge that will be difficult to replace. » In an interview, Vince Tyra said he was not considering any big changes. “The team did a really good job. There is a very good growth strategy in place. I am lucky to arrive in such a situation. »
Vince Tyra has previously held leadership positions in the apparel and investment industries. He notably managed the companies Alphabroder and Fruit of the Loom. The latter today belongs to the American conglomerate Berkshire Hathaway.
Vince Tyra was also an operating partner at Southfield Capital, where he was a member of the investment committee. Most recently, he served as Senior Vice President of Corporate Strategy and Mergers and Acquisitions at Houchens Industries, a holding company.
According to TD analyst Brian Morrison, Vince Tyra appears to be the ideal candidate to ensure a successful transition given his previous roles.
A major shareholder of Gildan for a long time, the Caisse de dépôt et placement du Québec sold its shares in the Montreal company last year. The decision to dump Gildan was motivated by tax concerns, according to our information. Gildan would not pay its fair share of tax in the eyes of the Caisse.
