Gildan Activewear Inc. · TSX:GIL
Gildan Activewear — Proxy Contest (May 2024)
59 slides from Gildan Activewear's proxy contest presentation, May 2024
Slide 1: Successfully Driving Long-Term Value for All Shareholders
Successfully Driving Long-Term Value for All Shareholders May 2024 1
Slide 2: Disclaimer
2 Disclaimer References in this presentation to “Gildan”, the “Company”, or the words “we”, “us”, and “our” refer, depending on the context, either to Gildan Activewear Inc. or to Gildan Activewear Inc. together with its subsidiaries. Certain statements included in this presentation constitute “forw
Slide 3: Why We Are Excited About Gildan's Future
3 Why We Are Excited About Gildan’s Future Gildan is an industry-leading company with a strategic moat around its business – given its competitive position and advantageous cost structure, the company should be a winner Gildan has a clear path to value creation through EBITDA expansion as delivered
Slide 4: This Is a Governance Story As Old As Time
4 This Is a Governance Story As Old As Time A founder CEO whose ego will …by already making the hard not allow him to transition out changes to management and of the company gracefully after the “legacy” board required to 20 years at the helm deliver future value creation for all shareholders… An op
Slide 5: Today's Speakers (1/2)
5 Today’s Speakers (1/2) • An executive whose sage advice has been relied on by senior leaders and organizations in both the private and public sectors, including being appointed as a Special Advisor to Bank of Canada Governor Mark Carney in 2010 aiding Canada’s recovery from the financial crisis •
Slide 6: Today's Speakers (2/2)
6 Today’s Speakers (2/2) • A former CEO who has led significant value creation for shareholders, including during his tenure as President and CEO at Tim Hortons Inc., where he drove +31% total shareholder return. In this role, he also led the negotiations that resulted in the U.S. $11 billion merger
Slide 7: Table of Contents
Table of Contents Executive Summary 9 Highly Qualified Board, Newly Refreshed Following Extensive Shareholder Engagement 10 – 17 Why Mr. Chamandy is No Longer the CEO that Gildan Needs 18 – 27 How and Why the Board Selected Vince Tyra to Lead Gildan 28 – 36 Gildan Has a Thoughtful, Long-Term Plan in
Slide 8: Executive Summary
Executive Summary és GILDAN
Slide 9: Executive Summary
Executive Summary • Materially refreshed Board of Directors has been thoughtfully selected to balance the need for historical continuity, fresh Significantly refreshed Board with perspectives and feedback from shareholders following extensive shareholder engagement and repeated attempts to the right
Slide 10: Highly Qualified Board, Newly Refreshed Following Extensive Shareholder Engagement
Highly Qualified Board, Newly Refreshed Following Extensive Shareholder Engagement
Slide 11: Gildan's Newly Refreshed Board Contains the Right Mix
11 Gildan’s Newly Refreshed Board Contains the Right Mix of Fresh Perspectives, Historical Continuity & Investor Input Gildan’s slate of director nominees includes five newly-appointed independent directors, four incumbent independent directors, and two independent director nominees from the disside
Slide 12: Independent Directors Have Experience in Skills Needed to Maximize Gildan's Potential
Our Independent Directors have Experience and Expertise in the Skills Needed to Maximize Gildan’s Full Potential New Director Incumbent Director Dissident Nominee Human Capital Environmental Textile & Strategy & Accounting & Global Growth Corp. Gov. & Digital & Sales & Manufacturing Supply Chain Mgm
Slide 13: A Closer Look at Our Highly Qualified Independent Nominees (1/2)
13 A Closer Look at Our Highly Qualified Independent Nominees (1/2) TIMOTHY HODGSON LEWIS L. (LEE) BIRD III JANE CRAIGHEAD LYNN LOEWEN LES VINER History as a Value Creator Value Creator Extensive Human Resources Extensive Leadership Strategic Planning and → Has driven a 104% TSR as → Most recently d
Slide 14: A Closer Look at Our Highly Qualified Independent Nominees (2/2)
14 A Closer Look at Our Highly Qualified Independent Nominees (2/2) DHAVAL BUCH MARC CAIRA SHARON DRISCOLL ANNE MARTIN-VACHON Experience Leading Sustainability Value Creator Extensive C-suite Experience Significant Retail, Marketing and Focused Initiatives → Drove a 31% TSR as President → Held numer
Slide 15: Newly Constituted Board Is Result of Thorough, Deliberate Process
15 Newly Constituted Board is the Result of a Thorough, Deliberate Process Rooted in Shareholder Engagement How the Board Decided on the Significant Refreshment • 87 meetings with shareholders following Mr. Chamandy’s termination, including multiple meetings with Robust Gildan’s top 25 shareholders
Slide 16: Thoughtful, Orderly Transition to Newly Constituted Board
16 Thoughtful, Orderly Transition to Gildan’s Newly Constituted Board Is Better for all Gildan Shareholders Than Additional, Unwarranted Disruption • Board refreshment carried out through a professional recruitment process that was rigorous, organized and thoughtful • Board interviews were conducted
Slide 17: Browning West Has Repeatedly Ignored Good Faith Attempts to Find Common Ground
Browning West Has Repeatedly Ignored Good Faith Attempts to Find Common Ground How the Board’s Proposition Could Improve Value Attempts to find common ground were ignored All good faith efforts made by the The Board has offered to Board were repeatedly rebuffed by BW who refused to entertain any set
Slide 18: Why Mr. Chamandy is No Longer the CEO that Gildan Needs
Why Mr. Chamandy is No Longer the CEO that Gildan Needs
Slide 19: Why Mr. Chamandy is Not the CEO Gildan Needs
19 Why Mr. Chamandy is Not the CEO Gildan Needs • While Mr. Chamandy deserves credit for helping Gildan reach the heights that it has, particularly during the first 10 years of his being CEO, it became apparent to the Board as early as in 2021 that it was time to prepare for a Gildan without Mr. Cha
Slide 20: Risky and Highly Dilutive Acquisition Strategy in 2023 Long Range Plan
20 Risky and Highly Dilutive Acquisition Strategy Contemplated in the 2023 Long Range Plan As part of their due diligence, our highly qualified new directors investigated the facts related to the multi-billion acquisition strategy proposed in October 2023 by Mr. Chamandy in his 2023 Long Range Plan
Slide 21: Comparison of Acquisitions Contemplated in Previous LRPs
21 Comparison of Acquisitions Contemplated in Previous LRPs • Mr. Chamandy claims that the multi-billion-dollar acquisition strategy proposed in the 2023 LRP was part of a regular annual exercise. A comparison between the 2021, 2022, and 2023 LRPs reveals that this claim is at best misleading • The
Slide 22: Mr. Chamandy's Questionable Behavior Clearly Showed That Change Was Needed
22 Mr. Chamandy’s Questionable Behavior Clearly Showed That Change Was Needed In the absence of a clear strategy, Mr. Chamandy jumped from one opportunistic strategy to another • In a period of just five months, between the business plan Mr. Chamandy presented to the Board in Oct. 2023 and the Brown
Slide 23: Over the Past Years, TSR and Share Price Growth Stalled Despite Numerous Acquisitions
Over the Past 10 Years, TSR and Share Price Growth Stalled Despite Numerous Acquisitions… Building the Business Value Plateau 12/2003 to Present | Total TSR: 1,156% / Annualized TSR: 13% 12/2003 to 12/2014 | Total TSR: 708% / Annualized TSR: 21% 12/2014 to Present | Total TSR: 55% / Annualized TSR:
Slide 24: Relative TSR Underperformance Compared to Peers
…with Relative TSR Underperformance Compared to Peers Expansion & Acquisition Back to Basics Gildan Sustainable Growth (GSG) (Q4 2010 – Q3 2018) (Q3 2018 – Q2 2022) (Q1 2022 – GLC Termination1) 300 % 60 % 10 % 5% 250 % 40 % 2% 0% 1% (2)% 223 % (4)% 200 % 20 % (5)% (10)% 150 % 0% 0% (1)% (15)% 132 %
Slide 25: Gildan Significantly Underperformed the Broader Market
25 During the 10 Years Prior to Mr. Chamandy’s Termination, Gildan Significantly Underperformed the Broader Market… 250 % 208 % 200 % Indexed Total Shareholder Return 150 % 100 % 67 % 50 % 0% (50)% (100)% Dec-2013 Oct-2014 Aug-2015 Jun-2016 Apr-2017 Feb-2018 Dec-2018 Oct-2019 Aug-2020 Jun-2021 Apr-2
Slide 26: Continued Underperformance Over the Last Years
26 …with Continued Underperformance Over the Last 5 Years as Well 150 % 100 % Indexed Total Shareholder Return 90% 50 % 22% 0% (50)% (100)% Dec-2018 Oct-2019 Aug-2020 Jun-2021 Apr-2022 Feb-2023 Dec-2023 Gildan Activewear Inc S&P 500 26 Source: Factset, Capital IQ and market data priced as of 08-Dec-
Slide 27: Our Board Has Been Focused on an Orderly Transition
27 Our Board Has Been Focused on an Orderly Transition – Mr. Chamandy Was Only Invested in Staying on as CEO Gildan’s May Dec Jan Mar Aug Sep Nov Respectfully Board 2021 2021 2022 2022 2023 2023 2023 informs Mr. Our Board Narrows search to Discusses timing Chamandy of the ran a steady, Agrees to a H
Slide 28: How and Why the Board Selected Vince Tyra to Lead Gildan
How and Why the Board Selected Vince Tyra to Lead Gildan
Slide 29: A CEO to Lead Gildan 2.0
29 A CEO to Lead Gildan 2.0 • In March 2022, as part of the Board’s robust and structured CEO succession planning process, the Board re-defined the role specification of its CEO, with input from Mr. Chamandy • Key characteristics that the Board and Mr. Chamandy identified1: ❑ Define and drive a prof
Slide 30: Robust Succession Process Followed By Gildan's Board
30 Robust Succession Process Followed By Gildan’s Board ✓ Maintained CEO succession planning and strategic planning on the Board’s agenda for ~3 years – key focus during regularly scheduled meetings ✓ A leading international executive search firm, compensation advisory firm, and legal firm were reta
Slide 31: Governance Expert Says Board Followed a Good and Rigorous Process
31 Renowned Independent Corporate Governance Expert Says Board of Gildan followed a “Good and Rigorous” CEO Succession Planning Process • Dr. Leblanc, one of Canada’s leading experts on corporate governance and accountability, was retained by the Board to evaluate Gildan’s CEO succession planning pr
Slide 32: Why the Previous Board Selected Vince Tyra to Lead Gildan
Why the Previous Board Selected Vince Tyra to Lead Gildan Experience and Qualifications Significant executive leadership positions since early on in his career ✓ Served on the Board of Directors at 10 companies and stepped in as interim CEO at three of these companies Ability to navigate complex sit
Slide 33: Vince's Track Record as a Successful Leader at Broder
Vince’s Track Record as a Successful Leader at Broder Total Revenue EBITDA and EBITDA Margin Commentary Total Revenue EBITDA 1 $51 EBITDA Margin % Successfully executed and integrated numerous acquisitions including Alpha Shirts ’99-’05 Revenue ’99-’05 EBITDA CAGR2: CAGR2: 19% 24% Delivered solid to
Slide 34: Executives and Investors Agree Vince is the Right Person
34 Executives and Investors Agree that Vince is the Right Person to Lead Gildan Moving Forward “With almost 30 years of private equity “Vince Tyra has an outstanding “In a short period of time, Vince proved investing experience, I have worked with reputation as a leader. The Board of himself to be a
Slide 35: Gildan's Succession Plan Answered Investor Concerns
35 Gildan’s Succession Plan Answered Investor Concerns Investor Concern Gildan’s Response ✓ Mr. Chamandy’s actions led to his own termination The timing of Mr. Chamandy’s ✓ The Board was unanimous in its conviction that retaining Mr. Chamandy as CEO would termination was incorrect and he have jeopar
Slide 36: During Vince Tyra's First ~90 Days as CEO
Leadership Philosophy in Practice During Vince Tyra’s First ~90 Days as CEO Visited 18 offices and manufacturing sites to get immersed into our processes and cultures Attended trade shows to reinforce presence and reconnect with customers Held town halls and interacted with over 2,000 Q2 2024 employ
Slide 37: Gildan Has a Thoughtful, Long-Term Plan in Place
Gildan Has a Thoughtful, Long- Term Plan in Place and is Successfully Executing Its Strategic Priorities
Slide 38: Execute Supply Chain Initiatives to Maintain Cost Leadership
Successfully Execute Supply Chain Initiatives to Maintain Availability, Cost Leadership, and Industry-leading Margins Execute on growth plan in Bangladesh Successfully ramp-up Kohinoor Phase 1 and lay the foundations to activate Phase 2 when appropriate Ensure continued resilience of our network Opt
Slide 39: Leverage Unique Brands and Develop Distinct Commercial Capabilities
Leverage Unique Brands and Develop Distinct Commercial Capabilities to Accelerate Growth and Strengthen Market Position What we need to do How we will do it • Reinforce messaging to align with each brand's identity Bridge the comfort, fit, The smart choice. • Refine product lines to support Quality
Slide 40: Deepen Relationships with Existing and Prospective Retail Partners
Deepen Relationships with Existing and Prospective Retail Partners, Strengthening Position as the Supplier of Choice Elevate our relationships Leverage dual-sourcing Address evolving retailer Capitalize on our vertical with retailers through our model to provide North needs for flexibility by integr
Slide 41: Fundamental Differences Between US and International Markets
Fundamental Differences Between US and International Markets Drive growth with ✓ Smaller market sizes relative to the US selective investments in regions that: ✓ Higher levels of fragmentation across supply chain ✓ Have a significant market size ✓ Different preferences for fabric weights and softnes
Slide 42: Browning West and Mr. Chamandy's Plan and Slate Put Shareholders at Risk
Browning West and Mr. Chamandy’s Plan and Slate Put Shareholders at Risk
Slide 43: Browning West and Mr. Chamandy are Not Aligned with Shareholders
Browning West and Mr. Chamandy are Not Aligned with the Interests of All Shareholders Mr. Chamandy was a disengaged CEO in the final stages of his As demonstrated over the past several months, Browning West tenure – sent less than a handful of work emails per day on will go through any means necessa
Slide 44: Plan to Reinstate Mr. Chamandy at All Costs Puts Shareholders at Risk
Plan to Reinstate Mr. Chamandy at All Costs Puts Shareholders at Risk 2023 LRP (Presented to the Gildan Supercharge Gildan Plan (BW’s Delta Browning West Strategy Board in October 2023) 1,2 “Marketing” Materials to Win Votes) 1 ▪ Limited organic growth ▪ Grow sales through market share gains Operati
Slide 45: Browning West Plan Rests on Risky Capital Allocation and Multiple Expansion
Browning West & Mr. Chamandy’s Plan Rests on a Risky Capital Allocation Plan and an Unrealistic Multiple Expansion Attractive But Deceiving Multiple Expansion Aggressive Financial Engineering Via Leverage Trailing P/E Gildan Historical Leverage 1 20.0x Forward P/E 3.0x BW’s Proposed Leverage to Supp
Slide 46: Analysts Agree with the Merits of Vince's Plan
Analysts Agree with the Merits of Vince’s Plan and View Browning West’s “Plan” as Unrealistic “We were encouraged by Gildan's update on its strategic priorities, as it looks to further optimize its operations and cost structure to drive ongoing market share gains. In addition, Gildan plans to furthe
Slide 47: Debunking Browning West's Myths
Debunking Browning West’s Myths Browning West’s Myths The Facts Mr. Chamandy has an unquestionable track record of 1 ✓ Gildan’s stock price had been stagnating for the past ~10 years value creation ✓ Mr. Chamandy’s own long-range plan, delivered to Gildan’s Board approximately 5 weeks before his ter
Slide 48: Browning West Has a History of Chaos and Value Destruction
Browning West Has a History of Chaos and a Track Record of Value Destruction Leadership Turmoil 3 CEOs 2 CEOs & 3 Chairs Change in the span of 4 months, with the result of Scott Thompson being in the span of 6 months; including Browning West endorsed individual who elected as Chairman, President and
Slide 49: Browning West's Nominees Are Not Additive to Our Existing Board
Browning West’s Nominees Are Not Additive to Our Existing Board Core Skills Required to Oversee Gildan’s Absent Skill Sustainable Growth Strategy Strategy & Risk Accounting & Human Capital Global Growth & Corp. Gov. & Manufacturing Supply Chain & Textile & Apparel ` Mgmt. Financial Mgmt. & Comp. Ope
Slide 50: Mr. Lee's Track Record as a Value Destructive Director
Mr. Lee’s Track Record as a Value Destructive Director Countryside’s Share Performance During Mr. Lee’s Tenure as a Director Key Value Destructive Events £4.0 share price performance under Mr. In January 2022, Mr. Lee was appointed to the Board of Countryside; the stock (~26%)1 Lee’s tenure as a Cou
Slide 51: Conclusion
Conclusion és GILDAN
Slide 52: Conclusion
Conclusion Shareholders of Gildan have a clear choice between… ✓ A refreshed Board of exceptional leaders led by Handing over control of Gildan to an activist hedge experienced Chair Tim Hodgson fund and their hand-picked director nominees Bringing back a part-time CEO who is out of ideas ✓ A pr
Slide 53: Vote FOR ALL of Gildan's Recommended Director Nominees on the BLUE Proxy Card
Vote FOR ALL of Gildan’s Recommended Director Nominees on the BLUE Proxy Card Today 53
Slide 54: Appendix
Appendix és GILDAN
Slide 55: Gildan's Board Continuously Attempted Constructive Engagement with Browning West
Gildan’s Board Continuously Attempted Constructive Engagement with Browning West April 22 Gildan announced that it would December 14 February 2, February 6, February 9, February 13, February 16, replace 5 members of the After a short conversation with the Chair of the February 22 and February 28 Boa
Slide 56: Unlike Browning West, Gildan has a Thoughtful, Long-term Plan
Unlike Browning West, Gildan has a Thoughtful, Long-term Plan in Place to Drive Value for All Shareholders Our Plan Browning West’s “Plan” Brand and Leverage distinct brands and develop commercial capabilities De-emphasize commercial focus – price is the only thing Commercial that matters Capabiliti
Slide 57: One of the World's Leading Vertically Integrated Apparel Manufacturers
57 Gildan: One of the World’s Leading Vertically Integrated Apparel Manufacturers • Manufacture everyday basic apparel, including ~$2.1bn USD of Approximately 30 Leading brands, activewear, underwear, and hosiery products $2.1bn capital investment 30 company-owned • Sell primarily to distributors, s
Slide 58: A Leading Vertically-Integrated Sustainable Manufacturer of Basic Apparel
A Leading Vertically-Integrated Sustainable Manufacturer of Basic Apparel Direct control over tier 1, 2 and 3 supply processes allows us to drive operational and resource efficiencies and deploy responsible and sustainable practices consistently throughout our supply chain • ~ $2.1B USD investment i
Slide 59: Gildan's Competitive Advantage
Gildan’s Competitive Advantage Overview of Gildan’s Manufacturing Competitive Advantages • State-of-the-art North American yarn spinning asset base provides cost advantage and consistent, high-quality supply of Yarn Spinning Capability open-end, MVS and ring-spun yarns • Strategically located in low