Browning West Urges Gildan Activewear’s Board of Directors to Promptly Answer Questions Related to Apparent Diligence Failures During Its CEO Search
As part of standard due diligence,
Both our research based on public information and our conversation with
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When it made its hiring decision, was the Board aware that Fruit of the Loom’s Activewear division endured a 26% decline in revenue and operating profit swung from
$75 million to a loss of over$30 million during Mr. Tyra’s tenure as President of that division?1
- When it made its hiring decision, was the Board aware that Fruit of the Loom’s share price decreased by 99% and the company filed for bankruptcy during Mr. Tyra’s tenure?2
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When it made its hiring decision, was the Board aware that
Broder Bros . delivered dismal financial results during Mr. Tyra’s tenure as CEO (net income decreased from$7 million to negative$3 million , net debt increased from$51 million to$316 million , and cumulative free cash flow was negative$15 million over the five years he was CEO)?3
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When it made its hiring decision, was the Board aware that
Broder Bros . was forced to restructure in the years after Mr. Tyra’s departure as CEO, largely due to the substantial debt he added to the business, and that its shareholders ultimately incurred substantial losses?
- How did the Board’s “renowned governance expert” determine that “the Board followed a good and rigorous process with respect to succession planning” considering Mr. Tyra’s troubling track record?4
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How did the Board’s vetting of
Mr. Tyra – including “detailed reference and background checks involving respectively eight and 24 external arms-length individuals” – fail to reveal troubling information related to his performance?5
- Did the Board fail in its diligence during the CEO search, considering the “governance expert” reported that the Board only vetted Mr. Tyra’s “credentials, competencies and other attributes” and not specifically his track record?
- How much did the Board compensate its “renowned governance expert” to author the favorable Governance Report for the Board?
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Was the Board’s decision to appoint
Mr. Tyra , a resident ofLouisville, Kentucky , influenced by connections to ChairDonald C. Berg , a businessman inLouisville who served on theUniversity of Louisville President’s Council during the same period thatMr. Tyra served as Athletic Director at theUniversity of Louisville ?
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Was the succession process overseen by Ms. Cunningham’s
Human Resources Committee or did Ms. Bertrand’s Corporate Governance Committee handle CEO succession, violating committee charters?
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Is the Board in possession of any other information that may impact shareholders’ evaluations of
Mr. Tyra and the directors who led his vetting?
If the Board decided to proceed with hiring
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About
Browning West is an independent investment partnership based in
Browning West seeks to identify and invest in a limited number of high-quality businesses and to hold these investments for multiple years. Backed by a select group of leading foundations, family offices, and university endowments, Browning West’s unique capital base allows it to focus on long-term value creation at its portfolio companies.
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1 Fruit of the Loom 1999 and 2000 10-Ks. Activewear segment revenue and operating earnings measured from 1997 through 2000, the period during which
2 Bloomberg. Total return for Fruit of the Loom stock from
3
4 Gildan Press Release: Gildan Releases Report on CEO Succession Process by Renowned Governance Expert (
5 Gildan Press Release: Gildan Releases Report on CEO Succession Process by Renowned Governance Expert (
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