Meeting the media on Tuesday for the first time since his return to the helm of Gildan, Glenn Chamandy suggested that the Montreal clothing manufacturer will pay the global minimum tax once legislation to this effect is enacted.
The global minimum tax rate on large business profits (revenues above US$1 billion) is 15%, as set by the Organization for Economic Co-operation and Development (OECD).
Gildan’s average effective tax rate was 4.4% in 2022, 2.8% in 2021 and 1.8% in 2020.
This spring, the Trudeau government tabled a notice in Parliament which notably sets out the Global Minimum Tax Lawestablishing a global minimum tax of 15% on the income of multinationals.
“This tax is a function of Canadian government legislation that must be enacted by the end of the year and under which we will pay the global minimum tax in the future,” Glenn Chamandy said Tuesday after having been officially elected to serve on the renewed Gildan Board of Directors.
At the beginning of May, the previous Gildan administration committed to paying the global minimum tax by announcing an upcoming investment of 200 million from the Caisse de dépôt et placement du Québec. However, the closing of this agreement is only scheduled for next Tuesday, June 4.
Gildan’s former management had also agreed to maintain “solid” local management and the world headquarters in Quebec for at least seven years so that the closing of the transaction with the Caisse would take place in June.
The Fund had indicated to The Press last Friday after the change in management at Gildan that it was still willing to act as a lender and become a shareholder of Gildan again as long as the conditions on fair taxation and presence in Quebec were respected.
The Caisse’s decision to invest again in Gildan came two years after Quebec’s largest institutional investor sold all its shares in Gildan because, in its view, the company was not paying its fair share of taxes, after having publicly warned her on a few occasions.
Glenn Chamandy says he has not yet had the chance to analyze the Caisse’s offer. “We will evaluate it, but we certainly want the Caisse to be a long-term shareholder of Gildan. »
The co-founder and CEO of Gildan also does not believe that the Caisse chose a clan during the battle by signing an agreement with the former Gildan administration.
“The Caisse wants an institution like Gildan to stay in Montreal for a long time and to pay its fair share of taxes. Its policy is not to invest in any company that does not pay the global minimum tax of 15%. The former board of directors attempted to sell Gildan and it is very likely that if it had sold the company, the buyer would possibly have been an American entity and the head office would then have been moved outside of Quebec “, says Glenn Chamandy.
A costly battle
Glenn Chamandy estimates the total cost of the power struggle that took place at Gildan between December and May at more than 65 million US (nearly 90 million Canadian) taking into account all legal and administrative costs (lawsuits brought by Gildan against dissident shareholder Browning West, sales process, executive severance pay, etc.). This sum, however, does not include his severance pay, which Glenn Chamandy says he never received, nor the costs of several millions paid by Browning West to lead his crusade.
“This is probably the greatest proxy fight in history,” says Glenn Chamandy. “Even more than that at Disney,” he adds.
The giant Disney, whose stock market value is 30 times greater than that of Gildan, has recently waged a long battle against activist investors unhappy with the company’s strategy.
Glenn Chamandy is back at the helm of Gildan following the departure of former CEO Vince Tyra and the wholesale resignation of board members last Thursday.
This twist of theater marked the turning point in a soap opera that began two weeks before Christmas with the sudden dismissal of Glenn Chamandy for reasons of strategy and succession.
This dismissal provoked revolt among several institutional shareholders. The American investment firm Browning West managed to rally enough support to reverse the decision to fire Glenn Chamandy.
Gildan shareholders met at their annual meeting on Tuesday in a conference room at 36e floor of an office tower adjacent to the Bell Center in downtown Montreal.
This gathering to confirm the return of Glenn Chamandy to the position of CEO took place in a certain intimacy. The company did not allow journalists to attend the meeting, which lasted about 30 minutes. Around a hundred shareholders came to participate in the event.
With a market capitalization greater than $8 billion, Gildan is one of the 20 largest public companies in Quebec.