Shareholder Activism in Canadian Corporations: Lessons from Gildan's Proxy Battle and the Path to Governance Reform

The 2025 proxy battle at Gildan Activewear has emerged as a defining case study in the evolution of shareholder activism and corporate governance in Canada. This high-stakes contest, led by U.S. hedge fund Browning West, not only reshaped Gildan's leadership but also underscored the growing influence of activist investors in challenging board decisions and demanding accountability. The case highlights strategic approaches to activism, the financial and reputational costs of resistance, and the broader implications for governance reforms in Canadian corporations.

Strategic Activism and the Gildan Campaign

Browning West's campaign against Gildan's board began in response to the abrupt removal of long-time CEO Glenn Chamandy in December 2023, a move the board defended as part of a planned succession process. However, Chamandy and his supporters, including Browning West, argued the transition was rushed and lacked transparency, triggering a revolt from senior executives and shareholders. The activist firm leveraged its 10% stake to push for Chamandy's reinstatement and board reforms, ultimately securing a rare victory: the unanimous endorsement of its director slate by all three major proxy advisory firms-ISS, Glass Lewis, and Egan Jones according to research. This outcome marked a turning point, as it demonstrated the power of aligning with institutional investors and proxy advisors to challenge entrenched leadership.

The campaign's success hinged on several strategic elements. First, Browning West emphasized Chamandy's track record of driving growth and profitability, contrasting it with the perceived instability under his successor, Vince Tyra. Second, the firm capitalized on structural advantages in Canadian corporate law to amplify its influence. Finally, the activist highlighted governance shortcomings, such as the board's lack of independent oversight and opaque decision-making, to rally shareholder support.

Financial and Reputational Costs of Resistance

Gildan's board, however, resisted the campaign aggressively, incurring over $76.8 million in legal and advisory fees-a figure that underscores the escalating costs of proxy battles. The company's defense included hiring multiple law firms, investment banks, and even a private investigator, yet these measures proved insufficient to counter the activist's momentum. The financial burden, coupled with a 40% surge in Gildan's share price following Chamandy's return, illustrates the dual risks of resisting shareholder demands: not only the direct costs of litigation but also the potential for market punishment if governance issues are perceived as misaligned with investor interests.

Implications for Corporate Governance Reform

The Gildan case has catalyzed broader discussions about governance reforms in Canada. Experts argue that the proxy battle exposed critical weaknesses in CEO succession planning and board accountability. As noted by the Canadian Coalition for Good Governance (CCGG), the incident highlights the need for transparent, stakeholder-inclusive processes when making high-stakes leadership decisions.

Regulatory bodies are also responding. The Canadian Securities Administrators (CSA) have proposed amendments to corporate governance disclosure rules, aiming to enhance transparency in board diversity and executive compensation according to official announcements. These changes reflect a growing emphasis on accountability, driven in part by shareholder activism. Proxy advisory firms like Glass Lewis and ISS have further tightened gender and racial diversity benchmarks, signaling a shift toward more inclusive governance standards as reported in 2025 guidelines.

Lessons for Future Activist Campaigns

The Gildan proxy battle offers valuable lessons for both activists and corporate boards. For activists, the case demonstrates the importance of aligning with proxy advisors and institutional investors to build broad-based support. It also underscores the strategic value of focusing on governance issues-such as board composition and CEO succession-that resonate with a wide range of shareholders.

For boards, the episode serves as a cautionary tale about the risks of perceived opacity and the need to proactively engage with shareholders. As Jonathan Feldman, a leading corporate governance lawyer, notes, "The Gildan case reinforces the imperative for companies to communicate openly with investors".

Conclusion

The Gildan proxy battle represents a watershed moment in Canadian corporate governance. It exemplifies how strategic activism can drive meaningful change, from leadership transitions to board reforms. For investors, the case underscores the importance of governance as a key factor in long-term value creation. For corporations, it highlights the need to adapt to an evolving landscape where transparency, accountability, and stakeholder engagement are no longer optional but essential. As Canada's regulatory and governance frameworks continue to evolve, the lessons from Gildan will likely shape the future of shareholder activism and corporate leadership for years to come.