Browning West Urges Gildan Sportswear Board to Address CEO Search Due Diligence Concerns

Browning West, LP, along with its affiliates (referred to as “Browning West” or “we”), a significant shareholder of Gildan Sportswear Inc. (NYSE: GIL) (TSX: GIL), holding approximately 5.0% of the Company’s outstanding shares, has raised concerns regarding the recent appointment of Mr. Vincent Tyra as Chief Executive Officer (CEO). We have formally requested the Board of Directors of Gildan (the “Board”) to promptly address inquiries related to apparent lapses in due diligence during the CEO selection process.

As part of our routine due diligence procedures, Browning West conducts thorough background investigations on the CEOs of our portfolio companies. Our examination of Mr. Tyra’s history revealed a pattern of value destruction. Despite this, we engaged in a meeting on February 2 with Mr. Tyra and Ms. Maryse Bertrand, president of the governance and social responsibility committee, seeking clarification on the Board’s rationale for considering Mr. Tyra as a qualified CEO for Gildan.

Regrettably, the meeting left us with more questions than answers, as Mr. Tyra and Ms. Bertrand were unable to satisfactorily address our concerns about the underwhelming financial performance of Fruit of the Loom Inc. and Broder Brothers Co. during Mr. Tyra’s previous roles in these companies. Following the meeting, we wrote to Ms. Shirley Cunningham, Chair of the Compensation and Human Resources Committee, seeking insights into the due diligence process. Unfortunately, our request for information remains unanswered.

Our independent research, based on public data and discussions with Mr. Tyra, has uncovered a history of value destruction, contradicting the Board’s public statements on a well-managed CEO succession process. We believe the Board has a duty to shareholders to address the following questions openly, enabling a comprehensive evaluation of its due diligence process:

  1. Was the Board aware of the significant decline in revenue and operating income at Fruit of the Loom’s sportswear division during Mr. Tyra’s tenure?
  2. Did the Board know about the substantial decline in Fruit of the Loom’s stock and the company’s bankruptcy during Mr. Tyra’s leadership?
  3. Was the Board aware of Broder Bros.’ disastrous financial results during Mr. Tyra’s tenure as CEO?
  4. How did the Board’s recognized governance expert endorse a seemingly flawed succession planning process?
  5. Why did the background checks, involving external individuals, not uncover concerning information about Mr. Tyra’s performance?
  6. Did the Board breach its duty of care in the CEO search by not thoroughly examining Mr. Tyra’s background?
  7. What was the cost incurred by the Board for the favorable governance report from the recognized governance expert?
  8. Were Mr. Tyra’s ties to Mr. Donald C. Berg a factor in his appointment as CEO?
  9. Was the CEO succession process appropriately overseen by the human resources committee, or was it contrary to committee mandates?
  10. Are there any undisclosed factors known to the Board that could impact shareholder perceptions of Mr. Tyra and the reviewing directors?

We contend that the Board’s decision to appoint Mr. Tyra, considering his history of value destruction, raises serious governance issues. Alternatively, if the decision was made without adequate due diligence, it indicates significant deficiencies in the CEO succession process. In either case, it appears that the directors responsible for the appointment may have failed in their duty to Gildan shareholders.

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