UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

Form 6-K

Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934

For the month of: March 2020
 
Commission File Number: 1-14830

GILDAN ACTIVEWEAR INC.
(Translation of Registrant’s name into English)

600 de Maisonneuve Boulevard West
33rd Floor
Montréal, Québec
Canada H3A 3J2
(Address of Principal Executive Offices)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:
Form 20-F  o
 
Form 40-F  x
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):   o

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):   o
SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
GILDAN ACTIVEWEAR INC.
Date: March 26, 2020
By:  
/s/  Lindsay Matthews
 
 
Name:  
Lindsay Matthews
 
 
Title:  
Vice-President, General Counsel and Corporate Secretary
SEC 1815 (04-09)
Persons who are to respond to the collection of information contained in this form are not required to respond unless the form displays a currently valid OMB control number.





EXHIBIT INDEX
Exhibit
 
Description of Exhibit
 
 
 
99.1
 
Management Proxy Circular
99.2
 
Notice of Meeting
99.3
 
Form of Proxy
99.4
 
Access Notice
99.5
 
AGM Guide



Exhibit









NOTICE OF ANNUAL MEETING OF
SHAREHOLDERS
To the shareholders of Gildan Activewear Inc. (the “Company”):
NOTICE IS HEREBY GIVEN that the annual meeting of shareholders (the “Meeting”) of the Company will be held via live audio webcast on Thursday, April 30, 2020 at 10:00 a.m. (Montréal time), for the purposes of:
(i)
receiving the consolidated financial statements of the Company for the fiscal year ended December 29, 2019, together with the auditors’ report thereon;
(ii)
electing eleven directors for the ensuing year;
(iii)
considering and, if deemed advisable, adopting a resolution (the full text of which is reproduced as Schedule “C” to the accompanying management information circular) to confirm the adoption of and to ratify the Shareholder Rights Plan adopted by the Board of Directors of the Company on February 21, 2020, the whole as described in the accompanying management information circular;
(iv)
considering and, if deemed advisable, approving an advisory resolution (the full text of which is reproduced as Schedule “D” to the accompanying management information circular) on the Company’s approach to executive compensation;
(v)
appointing auditors for the ensuing year; and
(vi)
transacting such other business as may properly come before the Meeting.
This year, out of an abundance of caution, to proactively deal with the unprecedented public health impact of coronavirus disease, also known as COVID-19, and to mitigate risks to the health and safety of our communities, shareholders, employees and other stakeholders, we will hold the Meeting in a virtual only format, which will be conducted via live audio webcast. All shareholders, regardless of their geographic location, will have an equal opportunity to participate in the Meeting and engage with directors and management of the Company as well as with other shareholders. Shareholders will not be able to attend the Meeting in person. At the Meeting, you will have the opportunity to ask questions and vote on a number of important matters. We encourage you to participate in the Meeting.
Registered shareholders and duly appointed proxyholders will be able to attend, participate, vote and ask questions at the Meeting online at https://web.lumiagm.com/199537532. Non-registered shareholders (being shareholders who hold their shares through a securities dealer or broker, bank, trust company or trustee, custodian, nominee or other intermediary) who have not duly appointed themselves as their proxy will be able to attend the Meeting only as guests. Guests will be able to listen to the Meeting but will not be able to vote or ask questions. Inside this document, you will find important information and detailed instructions about how to participate in the Meeting.
Dated at Montréal, Québec, Canada, March 4, 2020.
By order of the Board of Directors,
Lindsay Matthews
Vice-President, General Counsel
and Corporate Secretary

Shareholders may exercise their rights by attending the virtual Meeting online or by completing a form of proxy. If you are unable to attend the Meeting, please complete, date and sign the enclosed form of proxy and return it in the envelope provided for that purpose. A shareholder who wishes to appoint a person other than the directors and officers of the Company designated in the form of proxy or voting instruction form (the “Gildan proxyholders”) to represent such shareholder at the Meeting may do so by inserting such persons name in the blank space provided in the form of proxy or voting instruction form and following





the instructions for submitting such form of proxy or voting instruction form. This must be completed prior to registering such proxyholder, which is an additional step to be completed once you have submitted your form of proxy or voting instruction form. If you wish that a person other than the Gildan proxyholders attend and participate in the Meeting as your proxy and vote your shares, including if you are a non-registered shareholder and wish to appoint yourself as your proxy to attend, participate and vote at the Meeting, you MUST register such proxyholder after having submitted your form of proxy or voting instruction form identifying such proxyholder. Failure to register the proxyholder will result in the proxyholder not receiving a Control Number to participate in the Meeting. Without a Control Number, proxyholders will not be able to attend, participate or vote at the Meeting. To register a proxyholder, shareholders MUST visit http://www.computershare.com/gildan and provide Computershare Investor Services Inc. (“Computershare”), the transfer agent and registrar of the Company, with their proxyholders contact information, so that Computershare may provide the proxyholder with a Control Number via email.
Proxies must be received by Computershare, (100 University Avenue, 8th Floor, North Tower, Toronto, Ontario, Canada M5J 2Y1) no later than 10:00 a.m. on the second business day preceding the day of the Meeting or any adjournment thereof. Your shares will be voted in accordance with your instructions as indicated on the proxy.
If you are a registered shareholder, contact Computershare at 1-800 564 6253 (toll free in North America) or +1 (514) 982 7555 (outside North America), for any voting questions you may have.
Les actionnaires qui préféreraient recevoir la circulaire de sollicitation de procurations de la direction en français n’ont qu’à en aviser le secrétaire corporatif de Les Vêtements de Sport Gildan Inc.





MANAGEMENT INFORMATION CIRCULAR
Except as otherwise indicated, the information contained herein is given as of March 4, 2020. All dollar amounts set forth herein are expressed in U.S. dollars, the Companys functional and reporting currency, and the symbol “$” refers to the U.S. dollar, unless otherwise indicated.
WHAT’S INSIDE
INVITATION TO SHAREHOLDERS
SUMMARY
VOTING AND PROXIES
BUSINESS OF THE MEETING
Election of Directors
Adoption and Ratification of Shareholder Rights Plan
Appointment of Auditors
Advisory Vote on Executive Compensation
ELECTION OF DIRECTORS - NOMINEES
COMPENSATION OF DIRECTORS
COMPENSATION DISCUSSION AND ANALYSIS
Message from the Compensation and Human Resources Committee
Determining Compensation
Our Executive Compensation Practices
Our Named Executive Officers
Our Executive Compensation Program
Named Executive Officers’ Compensation
STATEMENT OF CORPORATE GOVERNANCE PRACTICES
NORMAL COURSE ISSUER BID
OTHER INFORMATION
Indebtedness of Directors and Executive Officers
Additional Information
Shareholder Proposals for 2019 Annual Meeting
Approval of Management Information Circular
SCHEDULE “A” MANDATE OF THE BOARD OF DIRECTORS
SCHEDULE “B” LONG TERM INCENTIVE PLAN
SCHEDULE “C” ADOPTION AND RATIFICATION OF SHAREHOLDER RIGHTS PLAN
SCHEDULE “D” ADVISORY VOTE ON EXECUTIVE COMPENSATION





INVITATION TO SHAREHOLDERS

INVITATION TO SHAREHOLDERS
Dear shareholders:
On behalf of the Board of Directors and management of the Company, we are pleased to invite you to attend the annual meeting of shareholders that will be held this year on Thursday, April 30, 2020 at 10:00 a.m. (Montréal time), which will be conducted in a virtual only format via live audio webcast at https://web.lumiagm.com/199537532. Shareholders will not be able to attend the meeting in person. A summary of the information shareholders will need to attend the meeting online is provided below in the section entitled “Voting and Proxies”.
This year, out of an abundance of caution, to proactively deal with the unprecedented public health impact of coronavirus disease, also known as COVID-19, and to mitigate risks to the health and safety of our communities, shareholders, employees and other stakeholders, we will hold the annual meeting in a virtual only format, which will be conducted via live audio webcast. All shareholders, regardless of their geographic location, will have an equal opportunity to participate in the Meeting and engage with directors and management of the Company as well as other shareholders.
The annual meeting is your opportunity to vote on a number of important matters as well as hear first-hand about our financial performance and strategic plans for the future. The enclosed management information circular describes the business to be conducted at the meeting and provides information on the Company’s executive compensation and corporate governance practices. Registered shareholders and duly appointed proxyholders will be able to attend, participate, vote and ask questions at the meeting online at https://web.lumiagm.com/199537532. Non-registered shareholders who have not duly appointed themselves as their proxy will be able to attend the meeting only as guests. Guests will be able to listen to the meeting but will not be able to vote or ask questions.
Your participation in the meeting is important to us and we value your input as shareholders. You can vote by attending the virtual meeting online, or alternatively by telephone, via the internet or by completing and returning the enclosed form of proxy or voting instruction form. If you have questions but are unable to attend the meeting online, you are always welcome to initiate communications with the Board through our Shareholder Engagement Policy, which is available on the Company’s website at www.gildancorp.com.
We look forward to welcoming you at the meeting and thank you for your continued support.
Sincerely,
Donald C. Berg
Chair of the Board of Directors
Glenn J. Chamandy
President and Chief Executive Officer



MANAGEMENT INFORMATION CIRCULAR 1


SUMMARY


SUMMARY
The following summary highlights some of the important information you will find in this management information circular (this “Circular”) of Gildan Activewear Inc. (the “Company” or “Gildan”).
Shareholder Voting Matters
VOTING MATTER
BOARD VOTE RECOMMENDATION
INFORMATION
Election of eleven directors
FOR each nominee
pages 16 to 23
Adoption and ratification of Shareholder Rights Plan
FOR
page 9
Appointment of KPMG LLP as auditors
FOR
page 14
Advisory vote on executive compensation
FOR
page 14
Our Director Nominees
 
NAME &
REGION
AGE
DIRECTOR SINCE
POSITION
BOARD & COMMITTEE ATTENDANCE IN 2019
OTHER PUBLIC BOARDS
AREAS OF EXPERTISE
 
 
William D. Anderson
Ontario, Canada

Independent
70
2006
Corporate Director
78%
1
-    Financial Accounting/Auditing
-    Risk Management
-    Human Resources
-    International

 
Donald C. Berg
Florida, United States

Independent
64
2015
President, DCB Advisory Services
100%
1
-    Financial Accounting/Auditing
-    Corporate Development
-    Retail Sales/Distribution
-    Government Relations/Public Policy

 
Maryse Bertrand
Québec, Canada

Independent
61
2018
Corporate Director
100%
2
-    Government Relations/Public Policy
-    Corporate Development
-  Capital Markets
-  Risk Management
 
Marc Caira
Ontario, Canada

Independent
66
2018
Corporate Director
100%
1
-    International
-    Executive Leadership
-    Retail Sales/Distribution
-    Marketing/Advertising

 
Glenn J., Chamandy
Québec, Canada
58
1984
President and Chief Executive Officer, Gildan Activewear Inc.
100%
0
-    Executive Leadership
-    Strategy
-    Manufacturing/Supply Chain
-  Marketing/Advertising

 
Shirley E. Cunningham
Florida, United States

Independent
59
2017
Corporate Director
100%
1
-    International
-  Corporate Development
-  Strategy
-  Innovation/Technology

 
Russell Goodman
Québec, Canada

Independent
66
2010
Corporate Director
100%
2
-  Financial Accounting/Auditing
-  Corporate Development
-  International
- Capital Markets

 
Charles M. Herington
Florida, United States

Independent
60
2018
Chief Operating Officer, Vice-Chairman and President of Global Operations, Zumba Fitness LLC
100%
1
-    International
-  Corporate Development
-  Executive Leadership
-  Human Resources


MANAGEMENT INFORMATION CIRCULAR 2


SUMMARY


 
NAME &
REGION
AGE
DIRECTOR SINCE
POSITION
BOARD & COMMITTEE ATTENDANCE IN 2019
OTHER PUBLIC BOARDS
AREAS OF EXPERTISE
 
 
Luc Jobin
Québec, Canada

Independent
60
2020
Corporate Director
n/a
1
-  Financial Accounting/Auditing
-  Corporate Development
-  Executive Leadership
- Manufacturing/Supply Chain

 
Craig A. Leavitt
New York, United States

Independent
59
2018
Corporate Director
100%
1
-    Executive Leadership
-  International
-  Retail Sales/Distribution
-  Marketing/Advertising
 
Anne Martin-Vachon
Ontario, Canada

Independent
58
2015
Chief Retail Officer, Rogers Communications Inc.
94%
0
-    Retail Sales/Distribution
-  Marketing/Advertising
-  Strategy
- Executive Leadership
We consider strong and transparent corporate governance practices to be an important factor in Gildan’s overall success and we are committed to adopting and adhering to the highest standards in corporate governance. Some of our best practices are:
l
All members of the Board are independent, except the CEO
l
Director orientation and continuing education
l
Independent Chair of the Board
l
Guidelines for interlocking board memberships
l
Only independent directors on Board committees
l
Board Diversity Policy
l
Annual election of directors (no staggered terms)
l
Formal annual Board performance assessment
l
Directors elected individually (no slate voting)
l
Shareholder Engagement Policy
l
Majority voting for directors
l
Code of Ethics Program
l
Board tenure and term limits
l
Share ownership guidelines for Board members and executives
l
Private sessions of independent directors at all Board and committee meetings
l
Risk management process
Highlights of our Executive Compensation Program
Our executive compensation program is designed to link executive pay with Gildan performance and align the interests of our executive management team with those of Gildan’s shareholders. Some of our compensation highlights are:
l
Annual incentive awards are subject to achievement of pre-established performance goals tied to both financial and qualitative objectives
l
Use of stress-testing and back-testing to assess alignment between pay and performance
l
Significant proportion of executive officers’ annual target compensation is “at-risk”
l
Performance share unit payouts under long-term incentive plan is capped at two times target
l
Amount that an executive officer can receive under the short-term incentive plan is capped at two times target
l
Use of representative and relevant peer group
l
No minimum guaranteed payout under the short-term incentive plan
l
Annual advisory vote on executive compensation
l
Long-term incentive plan equity awards are designed to encourage a long-term view of performance
l
Clawback Policy for senior executive incentive-based compensation
l
No hedging or monetizing of equity awards by executives
l
Minimum share ownership guidelines for executives
l
Use of an independent compensation consultant
l
Post-retirement share ownership guidelines for the President and Chief Executive Officer
l
No excessive perquisites
 
 



MANAGEMENT INFORMATION CIRCULAR 3


VOTING AND PROXIES

VOTING AND PROXIES
Solicitation of Proxies
This Circular is sent in connection with the solicitation by the management of the Company of proxies to be used at the annual meeting of shareholders of the Company to be held on Thursday, April 30, 2020 (the “Meeting”), at 10:00 a.m. (Montréal time), in a virtual only format which will be conducted via live audio webcast at https://web.lumiagm.com/199537532, and for the purposes set forth in the Notice of Annual Meeting of Shareholders (the “Notice of Meeting”), and at any adjournment thereof. The solicitation is being made primarily by mail, but proxies may also be solicited by telephone, facsimile or other personal contact by officers or other employees of the Company. The cost of the solicitation will be borne by the Company other than the cost of solicitation of the Objecting Non-Registered Holders (see the section entitled “Non-Registered Shareholders” below).
Notice-and-Access
This year, as permitted by Canadian securities regulators, Gildan is using notice-and-access (as defined in National Instrument 54-101 - Communication with Beneficial Owners of Securities of a Reporting Issuer ("NI-54-101")) to deliver the Meeting materials, including this Circular, to both its registered and non-registered shareholders. Gildan is also using notice-and-access to deliver its annual consolidated financial statements to its registered and non-registered shareholders. This means that the Circular and the annual consolidated financial statements of the Company are being posted online for shareholders to access, rather than being mailed out. Notice-and-access gives shareholders more choice, substantially reduces Gildan’s printing and mailing costs, and is more environmentally friendly as it reduces materials and energy consumption. Shareholders will still receive a form of proxy or a voting instruction form in the mail (unless shareholders have chosen to receive proxy materials electronically) so they can vote their shares but, instead of automatically receiving a paper copy of this Circular and the annual consolidated financial statements of the Company, shareholders will receive a notice with information about how they can access the Circular and annual consolidated financial statements of the Company electronically and how to request a paper copy. This Circular and annual consolidated financial statements of the Company are available on Gildan’s website at www.gildancorp.com, on SEDAR at www.sedar.com and on EDGAR at www.sec.gov.
Shareholders may request a paper copy of this Circular and/or the annual consolidated financial statements of the Company, at no cost, up to one year from the date this Circular was filed on SEDAR. Shareholders may make such a request at any time prior to the meeting by contacting Gildan’s transfer agent and registrar (the “Transfer Agent”), Computershare Investor Services Inc., via their website www.investorcentre.com/
 
service or by phone 1-866-964-0492. After the meeting, requests may be made via our website at www.gildancorp.com.
Virtual Only Meeting
This year, out of an abundance of caution, to proactively deal with the unprecedented public health impact of coronavirus disease, also known as COVID-19, and to mitigate risks to the health and safety of our communities, shareholders, employees and other stakeholders, we will hold our Meeting in a virtual only format, which will be conducted via live audio webcast. All shareholders, regardless of their geographic location, will have an equal opportunity to participate in the Meeting and engage with directors and management of the Company as well as with other shareholders.
Participation in the Meeting
Registered shareholders and duly appointed proxyholders who participate in the Meeting online will be able to listen to the Meeting, ask questions and vote, all in real time, provided they are connected to the internet and comply with all of the requirements set out in the sections below entitled “How to Vote” and “Attendance and Participation in the Meeting”. Non-registered shareholders who have not duly appointed themselves as their proxies may still attend the Meeting as guests. Guests will be able to listen to the Meeting but will not be able to vote or ask questions at the Meeting. See the sections below entitled “How to Vote” and “Attendance and Participation in the Meeting” below.
Voting Information
Please read this section carefully, as it contains important information regarding how to vote your shares. We have sent or caused to be sent forms of proxy to our registered shareholders and voting instruction forms to our non-registered shareholders.
Voting Shares and Principal Holders Thereof
As of March 4, 2020, there were 198,186,957 common shares of the Company (the “Common Shares”) issued and outstanding. Each Common Share entitles its holder to one vote with respect to the matters voted at the Meeting.
Holders of Common Shares whose names are registered on the lists of shareholders of the Company as at the close of business, Montréal time, on March 4, 2020, being the date fixed by the Company for determination of the registered holders of Common Shares who are entitled to receive notice of the Meeting, will be entitled to exercise the voting rights attached to the Common Shares in respect of which they are so registered at the Meeting, or any adjournment thereof, if present or represented by proxy thereat. As of March 4, 2020, there was an aggregate of 198,186,957 votes attached to the


MANAGEMENT INFORMATION CIRCULAR 4


VOTING AND PROXIES

Common Shares entitled to be voted at the Meeting or any adjournment thereof.
To the knowledge of the directors and officers of the Company, according to the latest publicly available information, no person owns beneficially, directly or indirectly, or exercises control or direction over, voting securities carrying 10% or more of the voting rights attached to any class of voting securities of the Company, as at March 4, 2020.
Appointment of Proxy
The persons named as proxyholders in the enclosed form of proxy are directors and officers of the Company (the “Gildan proxyholders”). Each shareholder has the right to appoint a person other than the Gildan proxyholders to represent such shareholder at the Meeting. In order to appoint such other person, the shareholder should insert such person’s name in the blank space provided on the form of proxy and delete the names printed thereon or complete another proper form of proxy and, in either case, deliver the completed form of proxy to the Transfer Agent (Computershare Investor Services Inc., 100 University Avenue, 8th Floor, North Tower, Toronto, Ontario, Canada M5J 2Y1) no later than 10:00 a.m. on the second business day preceding the day of the Meeting or any adjournment thereof at which the proxy is to be used.
Exercise of Discretion by Proxies
The persons named in the enclosed form of proxy will, on any ballot that may be called for, vote (or withhold from voting) the shares in respect of which they are appointed as proxies in accordance with the instructions of the shareholders appointing them. If a shareholder specifies a choice with respect to any matter to be acted upon, the shares will be voted accordingly. If no instructions are given, the shares will be voted FOR the election of the nominees of the board of directors of the Company (the “Board of Directors” or the “Board”) as directors, FOR the adoption and ratification of the shareholder rights plan (as set out in Schedule “C”), FOR the advisory resolution (as set out in Schedule “D”) on the Company’s approach to executive compensation, and FOR the appointment of KPMG LLP as auditors. The enclosed form of proxy confers discretionary authority upon the persons named therein with respect to amendments or variations to matters identified in the Notice of Meeting, and with respect to other business which may properly come before the Meeting or any adjournment thereof. As of the date hereof, management of the Company knows of no such amendment, variation or other business to come before the Meeting. If any such amendment or other business properly comes before the Meeting, or any adjournment thereof, the persons named in the enclosed form of proxy will vote on such matters in accordance with their best judgement.
 
Non-Registered Shareholders
You are a registered shareholder if your Common Shares are registered directly in your name with our Transfer Agent. You may hold your Common Shares in the form of a physical share certificate or through the direct registration system (DRS) on the records of our Transfer Agent in electronic form.
You are a non-registered shareholder (a “Non-Registered Holder”) if the Common Shares you beneficially own are registered either: (i) in the name of an intermediary that you deal with in respect of your Common Shares (an “Intermediary”), such as securities dealers or brokers, banks, trust companies and trustees or administrators of self-administered RRSPs, TFSAs, RRIFs, RESPs and similar plans, or (ii) in the name of a clearing agency of which the Intermediary is a participant. In accordance with NI 54-101, the Company has distributed copies of the Notice of Meeting and notice of availability of proxy materials to the clearing agencies and Intermediaries for distribution to Non-Registered Holders. Intermediaries are required to forward such notices to Non-Registered Holders, and often use a service company (such as Broadridge in Canada) for this purpose. Only registered shareholders or the persons they appoint as their proxies are permitted to vote at the Meeting.
If you receive more than one Notice of Meeting, form of proxy or voting instruction form, it means that you have multiple accounts with brokers or other nominees or with our Transfer Agent, as applicable, through which you hold Common Shares. The voting process is different for registered shareholders and Non-Registered Holders. Please follow the instructions carefully and vote or provide voting instructions for all of the Common Shares you own.
In all cases, Non-Registered Holders should carefully follow the instructions of their Intermediary, including those regarding when, where and by what means the voting instruction form or proxy form must be delivered.
If you are a Non-Registered Holder you may revoke voting instructions that have been given to an Intermediary at any time by written notice to the Intermediary.
Management of the Company does not intend to pay for an Intermediary to deliver the Meeting Materials to Non-Registered Holders who have objected to their Intermediary disclosing ownership information about them to the Company (“Objecting Non-Registered Holders”). Objecting Non-Registered Holders will not receive the Meeting Materials unless the Objecting Non-Registered Holder’s Intermediary assumes the costs of delivery.


MANAGEMENT INFORMATION CIRCULAR 5


VOTING AND PROXIES

How to Vote
Gildan shareholders may vote by proxy before the Meeting or vote at the Meeting, as described below:
1. Voting by proxy before the Meeting
You may vote before the Meeting by completing your form of proxy or voting instruction form in accordance with the instructions provided therein. Non-Registered Holders should also carefully follow all instructions provided by their Intermediaries to ensure that their Common Shares are voted at the Meeting. Voting by proxy is the easiest way to vote. It means you are giving someone else the authority to attend the Meeting and vote on your behalf.
The Gildan proxyholders named in the enclosed form of proxy will vote (or withhold from voting) the Common Shares in respect of which they are appointed as proxies in accordance with your instructions, including on any ballot that may be called. If there are changes to the items of business or new items properly come before the Meeting, a proxyholder can vote as he or she sees fit.
You can appoint someone else to be your proxy. This person does not need to be a shareholder. See the section below entitled “Appointment of a Third Party as Proxy”.
There are three ways for registered shareholders to vote by proxy before the Meeting:
(a)
Telephone voting - You may vote by calling the toll-free telephone number 1-866-732-VOTE (8683) Toll Free. You will be prompted to provide your control number printed on the form of proxy. If you vote by telephone, you may not appoint a person as your proxy other than the Gildan proxyholders named in the form of proxy or voting instruction form. Please follow the voice prompts that allow you to vote your Common Shares and confirm that your instructions have been properly recorded.
(b)
Internet voting - You may vote by logging on to the website indicated on the form of proxy (www.investorvote.com). Please follow the website prompts that allow you to vote your Common Shares and confirm that your instructions have been properly recorded.
(c)
Return your form of proxy by mail - You may vote by completing, signing and returning the form of proxy in the postage-paid envelope provided.
Proxies, whether submitted through the Internet or by telephone or mail as described above, must be received by the Transfer Agent (Computershare Investor Services Inc., 100 University Avenue, 8th Floor, North Tower, Toronto, Ontario, Canada M5J 2Y1) no later than 10:00 a.m. on the second business day preceding the day of the Meeting or any adjournment thereof. Your Common Shares will be voted in accordance with your instructions as indicated on the proxy. The time limit for the deposit of proxies may be waived or
 
extended by the chair of the Meeting at his or her discretion without notice.
If you are a registered shareholder, contact Computershare Investor Services Inc., our Transfer Agent, at 1-800 564 6253 (toll free in North America) or +1 (514) 982 7555 (outside North America), for any voting questions.
Non-Registered Holders will receive a Notice of Meeting and notice of availability of proxy materials and voting instruction form indirectly through their Intermediary. The Notice of Meeting and notice of availability of proxy materials contains instructions on how to access our proxy materials and return your voting instructions. You should follow the voting instructions of your Intermediary. Intermediaries may set deadlines for voting that are further in advance of the Meeting than those set out in this Circular. You should contact your Intermediary for further details.
2. Voting at the Meeting
Registered shareholders may vote at the Meeting by completing a ballot online during the Meeting, as further described in the section below entitled “Attendance and Participation in the Meeting”.
Non-Registered Holders who have not duly appointed themselves as their proxy will not be able to vote at the Meeting but will be able to participate as a guest. This is because the Company and our Transfer Agent do not have a record of the non-registered shareholders of the Company, and, as a result, will have no knowledge of your shareholdings or entitlement to vote unless you appoint yourself as your proxy. If you are a non-registered shareholder and wish to vote at the Meeting, you have to appoint yourself as your proxy by inserting your own name in the space provided on the voting instruction form sent to you and you must follow all of the applicable instructions, including the deadline, provided by your Intermediary. See the sections below entitled “Appointment of a Third Party as Proxy” and “Attendance and Participation in the Meeting”.
Appointment of a Third Party as Proxy
The following applies to shareholders who wish to appoint someone as their proxy other than the Gildan proxyholders named in the form of proxy or voting instruction form. This includes Non-Registered Holders who wish to appoint themselves as their proxy to attend, participate, vote or ask questions at the Meeting. Shareholders who wish to appoint someone other than the Gildan proxyholders as their proxy to attend the Meeting as their proxy and vote their shares MUST submit their form of proxy or voting instruction form, as applicable, appointing that person as their proxy AND register that proxyholder online, as described below. Registering your proxyholder is an additional step to be completed AFTER you have submitted your form of proxy or voting instruction form. Failure to register the proxyholder will result in the proxyholder


MANAGEMENT INFORMATION CIRCULAR 6


VOTING AND PROXIES

not receiving a Control Number that is required to vote at the Meeting.
Step 1 - Submit your form of proxy or voting instruction form: To appoint someone other than the Gildan proxyholders as your proxy, insert that person’s name in the blank space provided in the form of proxy or voting instruction form (if permitted) and follow the instructions for submitting such form of proxy or voting instruction form. This must be completed before registering such proxyholder, which is an additional step to be completed once you have submitted your form of proxy or voting instruction form.
If you are a Non-Registered Holder and wish to vote at the Meeting, you have to insert your own name in the space provided on the voting instruction form sent to you by your Intermediary, follow all of the applicable instructions provided by your Intermediary AND register yourself as your proxy, as described below. By doing so, you are instructing your Intermediary to appoint you as your proxy. It is important that you comply with the signature and return instructions provided to you by your Intermediary. See the section below entitled “Attendance and Participation in the Meeting”.
If you are a Non-Registered Holder located in the United States and wish to vote at the Meeting or, if permitted, appoint a third party as your proxy, in addition to the steps described below in the section entitled “Attendance and Participation in the Meeting”, you must obtain a valid legal proxy from your Intermediary. Follow the instructions from your Intermediary included with the legal proxy form and the voting information form sent to you, or contact your Intermediary to request a legal proxy form or a legal proxy if you have not received one. After obtaining a valid legal proxy from your Intermediary, you must then submit such legal proxy to the Transfer Agent. Requests for registration from non-registered shareholders located in the United States that wish to vote at the Meeting or, if permitted, appoint a third party as their proxy must be sent by e-mail or by courier to: Computershare Investor Services Inc., 100 University Avenue, 8th Floor, North Tower, Toronto, Ontario, Canada M5J 2Y1, and in both cases, must be labeled “Legal Proxy” and received no later than 10:00 a.m. on the second business day preceding the day of the Meeting or any adjournment thereof.
Step 2 - Register your proxyholder: To register a third party proxyholder, shareholders must visit http://www.computershare.com/gildan by 10:00 a.m. on the second business day preceding the day of the Meeting or any adjournment thereof and provide Computershare with the required proxyholder contact information so that Computershare may provide the proxyholder with a Control Number via email. Without a Control Number,
 
proxyholders will not be able to vote or ask questions at the Meeting but will be able to attend as a guest.
Attendance and Participation in the Meeting
The Company is holding the Meeting in a virtual only format, which will be conducted via live audio webcast. Shareholders will not be able to attend the Meeting in person. Attending the Meeting online enables registered shareholders and duly appointed proxyholders, including Non-Registered Holders who have duly appointed themselves as their proxy, to participate in the Meeting and ask questions, all in real time. Registered shareholders and duly appointed proxyholders can vote at the appropriate times during the Meeting. Guests, including Non-Registered Holders who have not duly appointed themselves as their proxy, can log in to the Meeting as set out below. Guests can listen to the Meeting but are not able to vote or ask questions.
Log in online at https://web.lumiagm.com/199537532. We recommend that you log in at least one hour before the Meeting starts.
Click “I have a Login” and then enter your Control Number (see below) and Password “gildan2020” (case sensitive).
OR
Click “Guest” and then complete the online form.
Registered Shareholders: The control number located on the form of proxy or in the email notification you received is your Control Number.
Duly appointed proxyholders: Computershare will provide the proxyholder with a Control Number by e-mail after the proxy voting deadline has passed and the proxyholder has been duly appointed AND registered as described in “Appointment of a Third Party as Proxy” above.
If you attend the Meeting online, it is important that you are connected to the internet at all times during the Meeting in order to vote when balloting commences. It is your responsibility to ensure connectivity for the duration of the Meeting. You should allow ample time to check into the Meeting online and complete the related procedure.
Revocation of Proxy
If you are a registered shareholder, you may change a vote you made by proxy by voting again by any of the means, and by the deadlines, described in the section above entitled “1. Voting by proxy before the Meeting”. Your new instructions will revoke your earlier instructions.
If you are a registered shareholder and you voted by proxy, you can revoke your voting instructions at any time up to and including the last business day preceding the day of the Meeting or any adjournment by (i) sending us a notice in writing (from you or a person authorized to sign on your behalf). Send your notice to the Transfer Agent


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(Computershare Investor Services Inc., 100 University Avenue, 8th Floor, North Tower, Toronto, Ontario, Canada M5J 2Y1); or any other manner permitted by law.
If you have followed the process for attending and voting at the Meeting online, voting at the Meeting online will revoke your previous proxy.
If you are a Non-Registered Holder, contact your Intermediary to find out how to change or revoke your voting instructions and the timing requirements, or for other voting questions. Intermediaries may set deadlines for the receipt of revocation notices that are farther in advance of the Meeting than those set out above and, accordingly, any such revocation should be completed well in advance of the deadline prescribed in the proxy card or voting instruction form to ensure it is given effect at the Meeting.
Voting Deadline
If voting by proxy, your proxy must be received by the Transfer Agent (Computershare Investor Services Inc., 100 University Avenue, 8th Floor, North Tower, Toronto, Ontario, Canada M5J 2Y1) no later than 10:00 a.m. on the second business day preceding the day of the Meeting or any adjournment thereof. The time limit for the deposit of proxies may be waived or extended by the chair of the Meeting at his or her discretion without notice.
The Company reminds shareholders that only the most recently dated voting instructions will be counted and any prior dated instructions will be disregarded.
Voting Questions
Registered shareholders may contact the Transfer Agent, at 1-800 564 6253 (toll free in North America) or +1 (514) 982 7555 (outside North America), for any voting questions.



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BUSINESS OF THE MEETING
Election of Directors
The articles of the Company provide that the Board of Directors shall consist of not less than five and not more than twelve directors. Except where authority to vote on the election of directors is withheld, the persons named in the enclosed form of proxy or voting instruction form intend to vote FOR the election of the nominees whose names are hereinafter set forth. All of the nominees are currently members of the Board of Directors and have been members since the dates indicated below. If prior to the Meeting, any of the nominees shall be unable or, for any reason, become unwilling to serve as a director, it is intended that the discretionary power granted by the form of proxy or voting instruction form shall be used to vote for any other person or persons as directors. Each director is elected for a one-year term ending at the next annual meeting of shareholders or when his or her successor is elected, unless he or she resigns or his or her office otherwise becomes vacant. The Board of Directors and management of the Company have no reason to believe that any of the said nominees will be unable or will refuse to serve, for any reason, if elected to office.
Nomination Process
The process to nominate the Company’s directors, including the Board skills matrix and Board succession planning and renewal, is described in the section entitled “Director Selection” in the Statement of Corporate Governance Practices of this Circular.
Diversity
The Board is committed to diversity and inclusion at Gildan and has adopted a formal written Board Diversity Policy to support this commitment at the Board level. In that regard, the Board will consider diversity, including gender, and other personal characteristics, when reviewing qualified candidates for recommendation for appointment to the Board to ensure that the Board is comprised of a diverse membership. See the section entitled “Diversity” in the Statement of Corporate Governance Practices of this Circular. Currently, three of the eleven nominees proposed for election to the Board of Directors (representing 27%) are women.
Nominees
The tables found in the section of this Circular entitled “Election of Directors - Nominees” provide the profile of the nominees proposed for election to the Board of Directors. Included in these tables is information relating to each nominee’s experience, qualifications, areas of expertise, attendance at Board and committee meetings, ownership of Gildan securities, as well as other public company board memberships. As you will note from the enclosed form of proxy
 
or voting instruction form, shareholders may vote for each director individually.
Majority Voting Policy
The Board of Directors has adopted a majority voting policy providing that in an uncontested election of directors, any nominee who receives a greater number of votes “withheld” than votes “for” his or her nomination will tender his or her resignation to the Board of Directors promptly following the shareholders’ meeting. The Corporate Governance and Social Responsibility Committee will consider the offer of resignation and will make a recommendation to the Board of Directors on whether to accept it. Absent exceptional circumstances, the Board will accept the resignation and it will be effective on the date of such acceptance. The Board of Directors will make its final decision and announce it in a press release within ninety days following the shareholders’ meeting giving the reasons for not accepting the resignation if such is the case. A director who tenders his or her resignation pursuant to this policy will not participate in any meeting of the Board of Directors or the Corporate Governance and Social Responsibility Committee at which the resignation is considered.
 
 
 
 
 
Adoption and Ratification of Shareholder Rights Plan
At the Meeting, shareholders will be asked to consider, and, if deemed advisable, to approve the ordinary resolution confirming the ratification of the shareholder rights plan (the “Rights Plan”) adopted by the Board of Directors on February 19, 2020. On that same date, the Company also entered into a shareholder rights plan agreement with Computershare Investor Services Inc. (the “Rights Plan Agreement”).
This Rights Plan replaces the Company’s existing shareholder rights plan which will expire on April 30, 2020, the date of the Meeting, unless its renewal for a further three-year period is approved by shareholders. The previous shareholder rights plan was adopted by the Board of Directors on December 1, 2010, and approved and ratified by the shareholders of Gildan at the annual meeting of shareholders held on February 9, 2011, and subsequently renewed for additional three-year periods at the annual meetings of shareholders held on February 6, 2014 and May 4, 2017 (approved with 91.38% of the shares voted at the meeting).
Under Part VI of the TSX Company Manual, shareholder rights plans must be ratified by shareholders of a listed company within six months of their adoption. The ordinary resolution, the text of which is reproduced at Schedule “C” to this Circular,


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requires the approval of a majority of the votes cast in respect thereof by Independent Shareholders (as defined in the Rights Plan). “Independent Shareholders” is generally defined to mean all holders of the Company’s Common Shares other than any Acquiring Person (as defined below) or Offeror (as defined in the Rights Plan), their respective affiliates, associates, and persons acting jointly or in concert with any Acquiring Person or Offeror, as well as certain employee benefit plans, stock purchase plans, deferred profit sharing plans and similar plans or trusts for the benefit of employees. To the knowledge of management, as of the date hereof, all of the Company’s shareholders qualify as Independent Shareholders. If the resolution is not approved by the Company’s Independent Shareholders at the Meeting, the Rights Plan and the rights issued thereunder will terminate at the close of the Meeting.
Objectives and Background of the Rights Plan
In adopting the Rights Plan, the Board of Directors considered the existing legislative framework governing take-over bids in Canada as well as rights plans recently adopted by other TSX-listed issuers and approved by their shareholders.
In February 2016, the Canadian Securities Administrators published amendments to the take-over bid regime that subsequently came into force in May 2016. The amendments, among other things, lengthened the minimum bid period to 105 days (from the previous 35 days), required that all non-exempt take-over bids meet a minimum tender requirement of more than 50% of the outstanding securities of the class that are subject to the bid, and required a ten-day extension after the minimum tender requirement is met. In connection with the renewal of its shareholder rights plan in February 2017, amendments were made by the Board of Directors to reflect the legislative changes to the take-over bid regime that were adopted in 2016 and described above, which renewed shareholder rights plan was ratified by Gildan’s shareholders at the annual meeting of shareholders held on May 4, 2017.
As the 2016 legislative amendments do not apply to certain exempt take-over bids, there continues to be a role for rights plans in protecting issuers and preventing the unequal treatment of shareholders. Some remaining areas of concern include:
protecting against “creeping bids” (the accumulation of more than 20% of the Common Shares through purchases exempt from Canadian take-over bid rules, such as (i) purchases from a small group of shareholders under private agreements at a premium to the market price not available to all shareholders, (ii) acquiring control through the slow accumulation of Common Shares not available to all shareholders, (iii) acquiring control through the slow accumulation of Common Shares over a stock exchange without paying a control premium, or (iv) through other transactions outside of Canada not subject to Canadian
 
take-over bid rules), and requiring the bid to be made to all shareholders; and
preventing a potential acquirer from entering into lock-up agreements with existing shareholders prior to launching a take-over bid, except for permitted lock-up agreements as specified in the Rights Plan.
By applying to all acquisitions of 20% or more of Common Shares, except in limited circumstances including Permitted Bids (as defined in the Rights Plan), the Rights Plan is designed to ensure that all shareholders receive equal treatment. In addition, there may be circumstances where bidders request lock-up agreements that are not in the best interest of the Company or its shareholders. Shareholders may also feel compelled to tender their Common Shares to a take-over bid, even if they consider such bid to be inadequate, out of a concern that failing to do so may result in a shareholder being left with illiquid or minority discounted shares in the Company. This is particularly so in the case of a partial bid for less than all the Common Shares.
The Rights Plan is therefore designed to encourage a potential acquiror who makes a take-over bid to proceed either by way of a Permitted Bid, which requires a take-over bid to satisfy certain minimum standards designed to promote fairness, or with the concurrence of the Board of Directors. If a take-over bid fails to meet these minimum standards and the Rights Plan is not waived by the Board of Directors, the Rights Plan provides that holders of Common Shares, other than the acquiror (or any affiliate or associate of the acquiror or any person acting jointly or in concert with the acquiror or any associate or affiliate of such person), will be able to purchase additional Common Shares at a significant discount to market, thus exposing the person acquiring Common Shares to substantial dilution of its holdings.
As a result of the foregoing, the Board of Directors has determined that it is advisable and in the best interests of the Company and its shareholders that the Company has in place a shareholder rights plan in the form of the Rights Plan.
In recommending the confirmation and ratification of the Rights Plan, it is not the intention of the Board of Directors to preclude a bid for control of the Company. The Rights Plan provides various mechanisms whereby shareholders may tender their Common Shares to a takeover bid as long as the bid meets the “Permitted Bid” criteria under the Rights Plan. Furthermore, even in the context of a takeover bid that would not meet the Permitted Bid criteria, the Board of Directors would still have a duty to consider any take-over bid for the Company and consider whether or not it should waive the application of the Rights Plan in respect of such bid. In discharging such duty, the Board of Directors must act honestly and in good faith with a view to the best interests of the Company and its shareholders.


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The Rights Plan was not adopted in response to any specific proposal to acquire control of the Company, nor is the Board of Directors currently aware of any pending or threatened take-over bid for the Company. The Rights Plan will be in effect until the close of business on the date on which the annual meeting of the shareholders of the Company is held in 2023, with one renewal option for a three-year period, subject to shareholder approval.
The Rights Plan does not preclude any shareholder from using the proxy mechanism of the Canada Business Corporations Act, the Company’s governing corporate statute, to promote a change in the Company’s management or in the Board of Directors, and it will have no effect on the rights of holders of the Common Shares to requisition a meeting of shareholders in accordance with the provisions of applicable legislation.
The Rights Plan is not expected to interfere with the Company’s day-to-day operations. The continuation of the existing outstanding rights and the issuance of additional rights in the future will not in any way alter the financial condition of the Company, impede its business plans, or alter its financial statements. In addition, the Rights Plan is initially not dilutive. However, if a Flip-in Event (as defined below) occurs and the rights separate from the Common Shares as described below, reported earnings per share and reported cash flow per share on a fully-diluted or non-diluted basis may be affected. In addition, holders of rights not exercising their rights after a Flip-in Event may suffer substantial dilution.
Summary of Rights Plan
The following is a summary of the principal terms of the Rights Plan, which summary is qualified in its entirety by reference to the terms of the Rights Plan Agreement. The Rights Plan Agreement is available on SEDAR at www.sedar.com and on EDGAR, at www.sec.gov, under the name of Gildan Activewear Inc. as a filing made on February, 20, 2020.
Operation of the Rights Plan
Pursuant to the terms of the Rights Plan Agreement, one right will be issued in respect of each Common Share outstanding as at the close of business on the business day immediately preceding the date on which the annual meeting of the shareholders of the Company, or any adjournment or postponement thereof, is held in 2020 (the “Record Time”). In addition, one right will be issued for each additional Common Share issued after the Record Time and prior to the earlier of the Expiration Time (as defined below) and the Separation Time (as defined below). The rights have an initial exercise price equal to the Market Price (as defined below) of the Common Shares as determined at the Separation Time, multiplied by five, subject to certain adjustments, and they are not exercisable until the Separation Time. Upon the occurrence of a Flip-in Event, each right shall constitute the right for the holder thereof, other than an Acquiring Person, to purchase
 
from the Company that number of Common Shares as have an aggregate Market Price on the date of consummation or occurrence of such Flip-in Event equal to twice the exercise price for an amount equal to the exercise price, subject to certain antidilution adjustments, in effect providing for a 50% discount relative to the Market Price. For example, if at the Separation Time, the Market Price of a Common Share is $40, the exercise price would be $200 (5 x $40) and a holder of a Right would be entitled, from and after the Flip-in Event, to purchase ten Common Shares (two times the exercise price divided by the Market Price, or (2 x $200)  $40 = 10 Common Shares) for an aggregate exercise price of $200.
Trading of Rights
Until the Separation Time, the rights trade with the Common Shares and are represented by the same share certificates as the Common Shares or by an entry in the Company’s securities register in respect of any outstanding Common Shares. Upon the occurrence of a Flip-in Event, from and after the Separation Time and prior to the Expiration Time, the rights would be evidenced by rights certificates and trade separately from the Common Shares. The rights do not carry any of the rights attaching to the Common Shares such as voting or dividend rights.
Separation Time
The rights will separate from the Common Shares to which they are attached and become exercisable at the time (the “Separation Time”) of the close of business on the eighth Trading Day (as defined below) after the earlier of:
(i)
the first date of a public announcement or disclosure of facts indicating that a person has become an Acquiring Person;
(ii)
the date on which a Permitted Bid or Competing Permitted Bid (as defined below) ceases to qualify as such;
(iii)
the date of the commencement of, or first public announcement or disclosure of, the intention of any person (other than the Company or any of its subsidiaries) to commence, a take-over bid for 20% or more of the Company’s outstanding Common Shares (other than a Permitted Bid, so long as such bid continues to satisfy the requirements of a Permitted Bid); or
(iv)
such later time as may from time to time be determined by the Board of Directors.
Flip-in Event
The acquisition by a person (an “Acquiring Person”), including others acting jointly or in concert with such person, of 20% or more of the outstanding Common Shares, other than by way of a Permitted Bid, or by way of an Exempt Acquisition (as described below), is referred to as a “Flip-in Event”. After the


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occurrence of the Flip-in Event, each right (other than those held by the Acquiring Person and any affiliate or associate of the Acquiring Person or any person acting jointly or in concert with the Acquiring Person or any associate or affiliate of such person) will entitle the holder thereof to purchase from the Company such number of Common Shares as has an aggregate Market Price on the date of consummation or occurrence of such Flip-in Event equal to twice the exercise price for an amount equal to the exercise price, subject to certain anti-dilution adjustments.
Exempt Acquisition
Subject to the terms and conditions set out in the Rights Plan, an “Exempt Acquisition” does not result in the occurrence of a Flip-In Event under the Rights Plan. An “Exempt Acquisition” includes an acquisition of voting shares or convertible securities of the Company:
(i)
in respect of which the Board of Directors has waived the application of the Rights Plan where permitted by the Rights Plan;
(ii)
which is made as an intermediate and temporary step in a series of related transactions in connection with an acquisition by the Company or by any corporation controlled by the Company;
(iii)
which is made pursuant to a distribution to the public by the Company by way of a prospectus as long as the person does not thereby increase its percentage ownership of the outstanding voting shares;
(iv)
which is made pursuant to a distribution by the Company by way of a private placement as long as the person does not thereby become the beneficial owner of more than 25% of the voting shares outstanding immediately prior to such private placement and all necessary stock exchange approvals are obtained and complied with;
(v)
which is made pursuant to the exercise of Rights; or
(vi)
which is made pursuant to an amalgamation, merger, arrangement, business combination or similar transaction which has been approved by the Board of Directors (but not including a Take-over Bid) and requiring shareholder approval.
Exercise Price
The exercise price is set at a multiple of five times the Market Price of the Common Shares at the Separation Time, subject to anti-dilution adjustments.
Definition of Market Price
Market Price is generally defined in the Rights Plan, on any given day on which a determination must be made, as the
 
average of the daily closing prices per Common Share on each of the 20 consecutive Trading Days through and including the Trading Day immediately preceding such date of determination, subject to certain exceptions. Trading Day is generally defined as the day on which the principal Canadian or United States securities exchange (as determined by the Board of Directors acting in good faith) on which the Common Shares are listed or admitted to trading is open for the transaction of business.
Permitted Bid Requirements
The requirements of a Permitted Bid are the following:
(i)
the take-over bid must be made by means of a take-over bid circular to all holders of Common Shares, other than the Offeror;
(ii)
the take-over bid must contain the following irrevocable and unqualified conditions:
no Common Shares shall be taken up or paid for:
a)
prior to the close of business on a date which is not less than 105 days following the date of the bid, or such shorter minimum period that a take-over bid (that is not exempt from any of the requirements of Division 5 (Bid Mechanics) of National Instrument 62-104 - Take-Over Bids and Issuer Bids (“NI 62-104”)) must remain open for deposits of securities thereunder, in the applicable circumstances at such time, pursuant to NI 62-104; and
b)
then only if, at the close of business on the date Common Shares are first taken up or paid for under such bid, more than 50% of the Common Shares held by Independent Shareholders shall have been tendered or deposited pursuant to the bid and not withdrawn.
unless the take-over bid is withdrawn, Common Shares may be tendered or deposited at any time prior to the close of business on the date of the first take-up of or payment for Common Shares;
Common Shares tendered or deposited pursuant to the take-over bid may be withdrawn until taken up and paid for; and
if more than 50% of the Common Shares held by Independent Shareholders are tendered or deposited to the take-over bid and not withdrawn, the Offeror must make a public announcement of that fact and the take-over bid must remain open for deposits and tenders of Common Shares for not less than ten days from the date of such public announcement.
The Rights Plan allows a competing Permitted Bid (a “Competing Permitted Bid”) to be made while a Permitted Bid


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is in existence. A Competing Permitted Bid must satisfy all the requirements of a Permitted Bid other than the requirement that no Common Shares shall be taken up and paid for prior to the close of business on a date which is not less than 105 days following the date of the Competing Permitted Bid. The Competing Permitted Bid shall also contain an irrevocable and unqualified condition that no Common Shares shall be taken up or paid for pursuant to the take-over bid prior to the close of business on the last day of the minimum initial deposit period that such take-over bid must remain open for deposits of securities thereunder pursuant to NI 62-104 after the date of the take-over bid constituting the Competing Permitted Bid.
Waiver and Redemption
The Board of Directors may, prior to the occurrence of a Flip-in Event, waive the dilutive effects of the Rights Plan in respect of, among other things, a particular Flip-in Event resulting from a take-over bid made by way of a takeover bid circular to all holders of the Common Shares. In these circumstances, such waiver shall also be deemed to be a waiver in respect of any other take-over bid made by way of a take-over bid circular to all holders of the Common Shares prior to the expiry of the first mentioned take-over bid.
The Board of Directors may, prior to the close of business on the eighth Trading Day following a Stock Acquisition Date (as defined in the Rights Plan), by written notice to the Rights Agent, waive the application of the Rights Plan to the related Flip-in Event provided the Acquiring Person has reduced its beneficial ownership of Common Shares (or entered into a contractual arrangement with the Company to do so within 10 days) such that at the time the waiver becomes effective the person is no longer an Acquiring Person.
Subject to the prior consent of the holders of Common Shares (prior to the Separation Time) or rights (after the Separation Time), the Board of Directors may elect to redeem all but not less than all of the outstanding rights at a price of $0.0001 each.
Amendment to the Rights Plan
The Rights Plan Agreement may be amended to correct any clerical or typographical error or to make such changes as are required to maintain the validity of the Rights Plan Agreement and the rights as a result of any change in any applicable legislation, regulations or rules, without the approval of the holders of Common Shares or rights. The Company may, with the prior consent of the holders of Common Shares or rights, amend, vary or delete any of the provisions of the Rights Plan Agreement in order to effect any changes made by the Board of Directors.
 
Fiduciary Duty of Board
The Rights Plan will not detract from or lessen the duty of the Board of Directors to act honestly and in good faith with a view to the best interests of the Company and its shareholders. The Board of Directors will continue to have the duty and power to take such actions and make such recommendations to the Company’s shareholders as are considered appropriate.
Exemptions for Investment Advisors and Grandfathered Persons
Persons whose ordinary business is managing investment funds for others, trust companies (acting in their capacities as trustees and administrators), statutory bodies whose business includes the management of funds, and administrators of registered pension plans are exempt from triggering a Flip-in Event, provided that they are not making, or are not part of a group making, a take-over bid. A person who is the beneficial owner of 20% or more of the outstanding Common Shares at the date of adoption of the Rights Plan shall not be considered an “Acquiring Person” (this exception shall cease to be applicable in the event a grandfathered person acquires more than an additional 1% of the Company’s outstanding voting shares).
Term
Unless terminated earlier in accordance with its applicable terms, the Rights Plan Agreement will expire on the date on which the annual meeting of the Company’s shareholders is held in 2023 or, if the Independent Shareholders re-approve the Rights Plan at or prior to such annual meeting of shareholders, then on the close of business on the date on which the annual meeting of the shareholders of the Company is held in 2026 (the “Expiration Time”).
Tax Consequences of Rights Plan
Certain Canadian Federal Income Tax Considerations of the Rights Plan
The Company will not be required to include any amount in computing the Company’s income for the purposes of the Income Tax Act (Canada) (the “ITA”) as a result of the issuance of the rights.
Under the ITA, the issuance of rights to a recipient could be considered as a taxable benefit, the value of which is required to be included in computing the income of a Canadian resident recipient or is subject to withholding tax in the case of a recipient who is not a resident of Canada. In any event, no amount in respect of the value of the rights is required to be included in computing income, or subject to withholding tax, if the rights do not have any value at the date of issue. The Company considers that the rights have negligible value when issued, there being only a remote possibility that the rights will


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ever be exercised. A holder of rights could be required to include an amount in computing income or be subject to withholding tax under the ITA if the rights become exercisable or are exercised. A holder of rights may be subject to tax under the ITA in respect of the proceeds of disposition of such rights.
This statement is of a general nature only and is not intended to constitute nor should it be construed to constitute legal or tax advice to any particular holder of Common Shares. Such shareholders are advised to consult their own tax advisors regarding the consequences of acquiring, holding, exercising or otherwise disposing of their rights, taking into account their own particular circumstances and any applicable federal, provincial, territorial or foreign legislation.
Eligibility for Investment
Provided that the Common Shares remain listed on a designated stock exchange for purposes of the ITA at all material times and that each person who is an annuitant, a beneficiary, an employer or a subscriber under a particular plan deals at arm’s length with the Company for purposes of the ITA , the rights will be qualified investments under the ITA for trusts governed by registered retirement savings plans, registered education savings plans, registered retirement income funds and deferred profit-sharing plans. The issuance of rights will not affect the status of the Common Shares under the ITA for such purposes.
Approval of the Resolution
The resolution in respect of the adoption and ratification of the Rights Plan, the text of which is reproduced at Schedule “C” to this Circular, must be approved by at least a majority of the votes cast at the Meeting by all shareholders of the Company present or represented by proxy in order for it to be adopted. The Company’s Board of Directors recommends that shareholders vote FOR the approval of the ordinary resolution.
Unless instructed otherwise, the persons designated in the enclosed form of proxy or voting instruction form intend to vote FOR the approval of this ordinary resolution.
 
 
 
 
 
Appointment of Auditors
KPMG LLP (“KPMG”), chartered accountants, has served as auditors of the Company since fiscal 1996. In fiscal 2019, in addition to retaining KPMG to report upon the annual consolidated financial statements of the Company, the Company retained KPMG to provide various audit, audit-related, and tax services. The aggregate fees billed for professional services by KPMG for each of the last two fiscal periods were as follows:
Audit Fees - The aggregate audit fees billed by KPMG were C$2,562,000 for fiscal 2019 and C$2,392,000 for fiscal 2018.
 
These services consisted of professional services rendered for the annual audit of the Company’s consolidated financial statements and the quarterly reviews of the Company’s interim financial statements, consultation concerning financial reporting and accounting standards, and services provided in connection with statutory and regulatory filings or engagements. The fees for the annual audit of the Company’s consolidated financial statements include fees relating to KPMG’s audit of the effectiveness of the Company’s internal control over financial reporting.
Audit-Related Fees - The aggregate audit-related fees billed by KPMG were C$78,000 for fiscal 2019 and C$80,000 for fiscal 2018. These services consisted of translation services in both years.
Tax Fees - The aggregate tax fees billed by KPMG were C$956,500 for fiscal 2019 and C$801,000 for fiscal 2018. These services consisted of tax compliance, including assistance with the preparation and review of tax returns, the preparation of annual transfer pricing studies, and tax services relating to domestic and international taxation.
All fees paid and payable by the Company to KPMG in fiscal 2019 were pre-approved by the Company’s Audit and Finance Committee pursuant to the procedures and policies set forth in the Audit and Finance Committee mandate. Except where authorization to vote with respect to the appointment of auditors is withheld, the persons designated in the enclosed form of proxy or voting instruction form intend to vote FOR the reappointment of KPMG, as auditors of the Company, to hold office until the close of the next annual meeting of shareholders at such remuneration as may be recommended by the Audit and Finance Committee and fixed by the Board.
 
 
 
 
 
Advisory Vote on Executive Compensation
The Board of Directors, through its Compensation and Human Resources Committee, has spent considerable time and effort overseeing the implementation of Gildan’s executive compensation program and the Board is satisfied that this program is aligned with the Company’s performance and reflects competitive market practices. The Board is also committed to maintaining an ongoing engagement process with the Company’s shareholders by adopting effective measures to receive shareholder feedback.
In this light, the Board of Directors wishes to offer Gildan’s shareholders the opportunity to cast at the Meeting an advisory vote on the Company’s approach to executive compensation as disclosed in the section entitled “Compensation Discussion and Analysis” of this Circular. This section discusses the Company’s executive compensation philosophy, objectives, policies and practices and provides important information on the key components of Gildan’s executive compensation program. It explains how Gildan’s executive compensation program is based on a pay-for-


MANAGEMENT INFORMATION CIRCULAR 14


BUSINESS OF THE MEETING


performance approach that is aligned with the long-term interests of the Company’s shareholders.
The Board recommends that shareholders indicate their support for the Company’s approach to executive compensation disclosed in this Circular by voting FOR the advisory resolution (the full text of which is reproduced at Schedule “D” to this Circular). Unless contrary instructions are indicated on the proxy form or the voting instruction form, the persons designated in the enclosed form of proxy or voting instruction form intend to vote FOR this advisory resolution.
As this is an advisory vote, the Board will not be bound by the results of the vote. However, the Board will take the results of the vote into account, together with feedback received from shareholders, when considering its approach to executive compensation in the future. Results of the vote will be disclosed in the report of voting results and related news release and in next year’s management information circular.


MANAGEMENT INFORMATION CIRCULAR 15


ELECTION OF DIRECTORS - NOMINEES


ELECTION OF DIRECTORS - NOMINEES
The following tables include profiles of each director nominee with a description of his or her experience, qualifications, areas of expertise, participation on the Board and its committees, if applicable, ownership of Gildan securities, as well as other public company board memberships. A more detailed description of each nominee’s competencies is described in the section entitled “Skills and Experience of Directors” in the Statement of Corporate Governance Practices.

William D. Anderson
Age 70
Toronto, Ontario, Canada
Director since May 2006
Independent(1)
William D. Anderson has had a career as a business leader in Canada spanning over 30 years. Mr. Anderson joined the Bell Canada organization in 1992, where from 1998 to 2001, he served as Chief Financial Officer of BCE Inc., Canada’s largest telecommunications company. From 2001 to 2005, Mr. Anderson served as President of BCE Ventures, the strategic investment unit of BCE Inc. and, from 2001 to 2007, he was the Chairman and Chief Executive Officer of Bell Canada International Inc., a subsidiary of BCE Inc. formed to invest in telecommunications operations outside Canada. Prior to joining the Bell Canada organization, Mr. Anderson was in public practice for nearly twenty years with the accounting firm KPMG LLP, where he was a partner for eleven years. Mr. Anderson currently serves as Chair of the Board of Directors of Sun Life Financial Inc., an international financial services organization. He has previously served on the boards of directors of MDS Nordion inc., TransAlta Corp., Four Seasons Hotels Ltd., Sears Canada, Inc., BCE Emergis, Inc., and CGI Group, Inc. Mr. Anderson was educated at the University of Western Ontario and is a Fellow of the Institute of Chartered Accountants of Ontario and a Fellow of the Institute of Corporate Directors.
Areas of Expertise:
Financial Accounting/Auditing
Risk Management
Human Resources
International
Board/Committee Membership and Attendance in 2019(2)
Public Board Memberships
Board of Directors(18)
100%
Sun Life Financial - International financial services organization
Corporate Governance Committee
50%
 
Compensation and Human Resources Committee
50%
 
Voting Results
In Favour
 
2019
99.77%
 
2018
99.61%
 
 
 
 
Securities Held
As at
  Common Shares(3)
DSUs(4)
Total Common
Shares and DSUs
Total Market Value
of Common Shares
and DSUs(5)
Minimum Shareholding Requirement(6)
Meets Requirement
Mar. 4, 2020
30,000

 
60,289
90,289
$2,231,944
$540,000
Yes
Mar. 6, 2019
30,000

 
56,219
86,219
$3,047,842
Change
Nil

 
4,070
4,070
($815,898)
Donald C. Berg
Age 64
Lakewood Ranch, Florida, United States
Director since February 2015
Independent(1)
Donald C. Berg is President of DCB Advisory Services, providing consulting services to food and beverage companies ranging from multi-national conglomerates to start-up companies. Mr. Berg retired in April 2014 as Executive Vice President, Chief Financial Officer at Brown-Forman Corporation, a U.S.-based producer and marketer of fine quality beverage alcohol brands and one of the largest companies in the global wine and spirits industry. Mr. Berg’s career at Brown-Forman Corporation spanned over 25 years, where he held various executive positions including as President of its Advancing Markets Group, President of Brown-Forman Spirits Americas, the company’s largest operating group, head of its corporate development and strategy functions, and director of its mergers and acquisitions group. Prior to joining Brown-Forman, Mr. Berg has held a wide variety of finance, sales and marketing roles with respected national and international firms after beginning his career as a certified public accountant with Ernst & Whinney. Mr. Berg is also a member of the Board of Directors of Meredith Corporation, a publicly-held media and marketing company, where he is also Chair of the Audit and Finance Committee. In addition, he is a member of the Board of Beam Suntory International, the third largest global spirits company wholly owned by Tokyo-based Suntory Holdings Group. Mr. Berg holds a Master of Business Administration from the Wharton School of Business and earned his Bachelor of Arts degree in accounting and business administration from Augustana College in Illinois.
Areas of Expertise:
Financial Accounting/Auditing
Corporate Development
Retail Sales/Distribution
Government Relations/Public Policy
Board/Committee Membership and Attendance in 2019(2)
Public Board Memberships
Board of Directors
100%
Meredith Corporation - Media and marketing company
Audit and Finance Committee
100%
 
Chair of the Compensation and Human Resources Committee
100%
 
Chair of the Board of Directors(7)
100%
 
Voting Results
In Favour
 
2019
97.75%
 
2018
99.35%
 
Securities Held
As at
  Common Shares(3)
DSUs(4)
Total Common
Shares and DSUs
Total Market Value
of Common Shares
and DSUs
(5)
Minimum Shareholding Requirement(6)
Meets Requirement
Mar. 4, 2020
3,000


34,545
37,545
$928,112
$540,000
Yes
Mar. 6, 2019
3,000


25,535
28,535
$1,008,712
Change
Nil


9,010
9,010
($80,600)


MANAGEMENT INFORMATION CIRCULAR 16


ELECTION OF DIRECTORS - NOMINEES


Maryse Bertrand
Age 61
Westmount, Québec, Canada
Director since May 2018
Independent(1)
Maryse Bertrand has had a career in law and business spanning over 35 years. Ms. Bertrand is currently an advisor in corporate governance and risk management and is a corporate director. Ms. Bertrand is a member of the Board of Directors of National Bank of Canada, Canada’s sixth largest retail and commercial bank, of PSP Investments, one of Canada’s largest pension investment managers, and of Metro Inc., a leader in the grocery and pharmaceutical distribution sectors in Canada, where she chairs the Corporate Governance and Nominating Committee. From 2016 to 2017, she was Strategic Advisor and Counsel to Borden Ladner Gervais LLP, in matters of risk and governance. From 2009 to 2015, she was Vice-President, Real Estate Services, Legal Services and General Counsel at CBC/Radio-Canada, Canada’s public broadcaster, where she also chaired the National Crisis Management Committee and the Board of Directors of ArTV, a specialty channel. Prior to 2009, Ms. Bertrand was a partner of Davies Ward Phillips and Vineberg LLP, where she specialized in M&A and corporate finance, and served on the firm’s National Management Committee. Ms. Bertrand also chairs the Board of the Institute of Corporate Directors (Québec Chapter), and is a Vice-Chair of the Board of Governors of McGill University. She was named as Advocatus emeritus (Ad. E.) in 2007 by the Québec Bar in recognition of her exceptional contribution to the legal profession. Ms. Bertrand holds a law degree from McGill University (with High Distinction) and a Masters in Risk Management from New York University, Stern School of Business.
Areas of Expertise:
Government Relations/Public Policy
Corporate Development
Capital Markets
Risk Management
Board/Committee Membership and Attendance in 2019(2)
 
Public Board Memberships
Board of Directors
100%
Metro Inc. - Grocery and pharmaceutical distribution
Audit and Finance Committee
100%
National Bank of Canada - Retail and commercial bank
Chair of the Corporate Governance and Social Responsibility Committee
100%
 
Voting Results
In Favour
 
2019
98.43%
 
2018
99.98%
 
Securities Held
As at
  Common Shares(3)
DSUs(4)
Total Common
Shares and DSUs
Total Market Value
of Common Shares
and DSUs
(5)
Minimum Shareholding Requirement(6)
Meets Requirement
Mar. 4, 2020
2,500


5,923
8,423
$208,217
$540,000
No(12)
Mar. 6, 2019
1,200


2,547
3,747
$132,456
Change
1,300


3,376
4,676
$75,761
Marc Caira
Age 66
Toronto, Ontario, Canada
Director since May 2018
Independent(1)
Marc Caira is the Vice-Chairman of the Board of Directors of Restaurant Brands International Inc., a multinational quick service restaurant company. He also serves on the Boards of Directors of Minto Group, a private real estate developer, and the Toronto General & Western Hospital Foundation. Previously, Mr. Caira was President and Chief Executive Officer of Tim Hortons Inc., a multinational fast food restaurant, from 2013 to 2014, and he also served as a member of the Executive Board of Nestlé S.A. in Switzerland, a transnational food and beverage company, and as Chief Executive Officer of Nestlé Professional. Mr. Caira holds an Advanced Diploma in Marketing Management from Seneca College, Toronto and is a graduate of the Director Program at The International Institute for Management Development, Lausanne, Switzerland.
Areas of Expertise:
International
Executive Leadership
Retail Sales/Distribution
Marketing/Advertising
Board/Committee Membership and Attendance in 2019(2)
 
Public Board Memberships
Board of Directors
100%
Restaurant Brands International Inc. - Multinational quick service restaurant company
Corporate Governance and Social Responsibility Committee
100%
Audit and Finance Committee
100%
 
 
 
 
 
Voting Results
In Favour
 
 
2019
96.77%
 
 
2018
99.97%
 
Securities Held
As at
  Common Shares(3)
DSUs(4)
Total Common
Shares and DSUs
Total Market Value
of Common Shares
and DSUs
(5)
Minimum Shareholding Requirement(6)
Meets Requirement
Mar. 4, 2020
1,560

(16) 
10,660
12,220
$302,078
$540,000
No(12)
Mar. 6, 2019
Nil


4,622
4,622
$163,388
Change
1,560


6,038
7,598
$138,690


MANAGEMENT INFORMATION CIRCULAR 17


ELECTION OF DIRECTORS - NOMINEES


Glenn J. Chamandy
Age 58
Westmount, Québec, Canada
Director since May 1984
Not Independent (Management)
Glenn J. Chamandy is one of the founders of the Company and has devoted his entire career to building Gildan into an industry leader. Mr. Chamandy has been involved in various textile and apparel businesses for over thirty years. Prior to his appointment as President and Chief Executive Officer in 2004, the position which he currently holds, Mr. Chamandy served as a Co-Chief Executive Officer and Chief Operating Officer of Gildan.
Board/Committee Membership and Attendance in 2019(8)
Public Board Memberships
Board of Directors
100%
None
Areas of Expertise:
Executive Leadership
Strategy
Manufacturing/Supply Chain
Marketing/Advertising
 
 
 
Voting Results
In Favour
 
2019
99.91%
 
2018
99.98%
 
 
 
 
Securities Held
As at
  Common Shares(3)
Options Exercisable(9)
PSUs(10)
Total Market Value
of Common Shares,
Options Exercisable
and PSUs(11)
Minimum Shareholding Requirement(6)
Meets Requirement
Mar. 4, 2020
3,219,245

(15) 
455,000
616,827
$94,919,167
$7,200,000
Yes
Mar. 6, 2019
3,162,625

 
239,773
468,694
$130,399,405
Change
56,620

 
215,227
148,133
($35,480,238)
Shirley E. Cunningham
Age 59
Estero, Florida, United States
Director since February 2017
Independent (1)
Shirley E. Cunningham has had a career in information technology and business management spanning over 25 years. Ms. Cunningham retired in 2018 from her position as Executive Vice-President and Chief Operating Officer, Ag Business and Enterprise Strategy, for CHS Inc., a global energy, grains and foods company. Prior to joining CHS Inc. in 2013, Ms. Cunningham was the Chief Information Officer for Monsanto Company, a global agriculture company. Ms. Cunningham currently serves on the Board of Directors of Kemira Oyj, a Finnish-based global chemicals company providing innovative and sustainable solutions for improving water, energy and raw material efficiencies. She received a Master’s degree in Business Administration from Washington University in St. Louis.
Areas of Expertise:
International
Corporate Development
Strategy
Innovation/Technology
Board/Committee Membership and Attendance in 2019(2)
Public Board Memberships
Board of Directors
100%
Kemira Oyj - Global chemical company
Audit and Finance Committee
100%
 
Chair of the Compensation and Human Resources Committee
100%
 
 
 
 
Voting Results
 
 
2019
98.25%
 
 
2018
98.96%
 
Securities Held
As at
  Common Shares(3)
DSUs(4)
Total Common
Shares and DSUs
Total Market Value
of Common Shares
and DSUs(5)
Minimum Shareholding Requirement(6)
Meets Requirement
Mar. 4, 2020
Nil
 
16,554
16,554
$409,215
$540,000
No(13)
Mar. 6, 2019
Nil
 
10,033
10,033
$354,667
Change
Nil
 
6,521
6,521
$54,548





MANAGEMENT INFORMATION CIRCULAR 18


ELECTION OF DIRECTORS - NOMINEES


Russell Goodman
Age 66
Mont Tremblant, Québec, Canada
Director since December 2010
Independent(1)
Russell Goodman is a corporate director of public, private and not-for-profit companies. In addition to Gildan, he currently serves on the Board of Directors of Metro Inc., a leader in grocery and pharmaceutical distribution in Canada, where he is Chair of the Audit Committee and a member of the Corporate Governance and Nominating Committee, and the Board of Directors of Northland Power Inc., a leading global independent power producer, where he is Lead Independent Director, Chair of the Audit Committee and a member of the Compensation Committee. Mr. Goodman is also Chairman of the Independent Review Committee of IG Wealth Management Funds, which comprise mutual funds, ETFs and other wealth management solutions managed by entities within the Power Corporation group of companies. Mr. Goodman spent his business career at PricewaterhouseCoopers LLP until his retirement in 2011. From 1998 to 2011, he was the Managing Partner of various business units across Canada and the Americas and also held global leadership roles in the services and transportation industry sectors. Mr. Goodman is a Fellow Chartered Professional Accountant and a holder of the ICD.D designation from the Institute of Corporate Directors. He completed a Bachelor of Commerce degree from McGill University, is a recipient of the Governor General of Canada’s Sovereign’s Medal for Volunteers, and is a member of the Canadian Ski Hall of Fame.
Areas of Expertise:
Financial Accounting/Auditing
Corporate Development
International
Capital Markets
Board/Committee Membership and Attendance in 2019(2)
Public Board Memberships
Board of Directors
100%
Metro Inc. - Grocery and pharmaceutical distribution
Chair of the Audit and Finance Committee
100%
Northland Power Inc. - Power producer
Compensation and Human Resources Committee
100%
 
 
 
 
Voting Results
In Favour
 
2019
97.06%
 
2018
98.83%
 
Securities Held
As at
Common Shares(3)
DSUs(4)
Total Common Shares and DSUs
Total Market Value of Common Shares and DSUs(5)
Minimum Shareholding Requirements(6)
Meets Requirement
Mar. 4, 2020
14,500

(17) 
37,932

52,432

$1,296,119
$540,000
Yes
Mar. 6, 2019
12,000

 
34,011

46,011

$1,626,489
Change
2,500

 
3,921

6,421

($330,370)
Charles M. Herington
Age 60
Miami, Florida, United States
Director since May 2018
Independent(1)
Charles M. Herington is the Chief Operating Officer, Vice-Chairman and President of Global Operations at Zumba Fitness LLC, a worldwide provider of dance fitness classes. Mr. Herington sits on the Board of Directors of Molson Coors Brewing Company, a multinational brewing company, and was previously on the Board of Directors of its predecessor company, Adolph Coors Company, since 2003. Mr. Herington also sits on the Board of Directors of Klox Technologies, a specialty biopharmaceutical company, where he is Chair of the Compensation Committee and sits on the Audit Committee, as well as the Board of Directors of Hy Cite Enterprises, LLC, a designer and manufacturer of household products, where he sits on the Audit and Corporate Governance Committees. From 2006 to 2012, Mr. Herington served as Executive Vice-President of Developing and Emerging Markets Group (Latin America, Asia Pacific and Central & Eastern Europe) at Avon Products Inc., a manufacturer and marketer of beauty related products. Prior to that, Mr. Herington was President at Pepsico Restaurants Latin America, then he served as President of the Latin America division of Revlon, and then as President and Chief Executive Officer of America Online (AOLA) Latin America. Mr. Herington began his career in brand management at Procter & Gamble Co, a multinational consumer goods corporation. Mr. Herington received his B.S. from Instituto Tecnológico y de Estudios Superiores de Monterrey.

Areas of Expertise:
International
Corporate Development
Executive Leadership
Human Resources
Board/Committee Membership and Attendance in 2019(2)
 
Public Board Memberships
Board of Directors
100%
Molson Coors Brewing Company - Global brewing company
Corporate Governance and Social Responsibility Committee
100%
 
Compensation and Human Resources Committee
100%
 
 
 
 
Voting Results
In Favour
 
2019
96.70%
 
2018
99.71%
 
Securities Held
As at
  Common Shares(3)
DSUs(4)
Total Common
Shares and DSUs
Total Market Value
of Common Shares
and DSUs
(5)
Minimum Shareholding Requirement(6)
Meets Requirement
Mar. 4, 2020
5,200


10,660
15,860
$392,059
$540,000
No(12)
Mar. 6, 2019
5,200


4,622
9,822
$347,208
Change
Nil


6,038
6,038
$44,851


MANAGEMENT INFORMATION CIRCULAR 19


ELECTION OF DIRECTORS - NOMINEES


Luc Jobin
Age 60
Westmount, Québec, Canada
Director since February 2020
Independent(1)
Luc Jobin has had a career as a business leader in Canada spanning over 30 years. Mr. Jobin retired from Canadian National Railway Company, a leading North American transportation and logistics company, where he served as President and Chief Executive Officer from 2016 to 2018 and as Executive Vice-President and Chief Financial Officer from 2009 to 2016. Prior to that, from 2005 to 2009, Mr. Jobin was Executive Vice-President of Power Corporation of Canada, a Canadian multinational diversified management and holding company with interests in the financial services, asset management, sustainable and renewable energy, and other business sectors. Previously, from 2003 to 2005, Mr. Jobin was Chief Executive Officer of Imperial Tobacco Canada, a subsidiary of British American Tobacco p.l.c., a multinational cigarette and tobacco manufacturing company, as well as Executive Vice-President and Chief Financial Officer, from 1998 to 2003. Mr. Jobin currently serves on the Board of Directors of British American Tobacco p.l.c., where he is a member of the Audit and Nominations Committees, and the Board of Directors of Hydro-Québec, a public utility company that manages the generation, transmission and distribution of electricity in Québec. Mr. Jobin is a Chartered Professional Accountant and he received a Bachelor of Science Degree from Nova Southeastern University.
Areas of Expertise:
Financial Accounting/Auditing
Corporate Development
Executive Leadership
Manufacturing/Supply Chain
Board/Committee Membership and Attendance in 2019(2)
 
Public Board Memberships
n/a
 
British American Tobacco p.l.c - Global cigarette and tobacco
manufacturing company
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Securities Held
As at
  Common Shares(3)
DSUs(4)
Total Common
Shares and DSUs
Total Market Value
of Common Shares
and DSUs
(5)
Minimum Shareholding Requirement(6)
Meets Requirement
Mar. 4, 2020
Nil
 
Nil
Nil
Nil
$540,000
No(14)
Craig A. Leavitt
Age 59
New York, New York, United States
Director since May 2018
Independent(1)
Craig Leavitt has had a career as a business leader in the retail sector that spans over 30 years. Mr. Leavitt most recently served as Chief Executive Officer of Kate Spade & Company, a designer and marketer of fashion accessories and apparel, from 2014 to 2017, where he oversaw all aspects of the Kate Spade New York and Jack Spade businesses and was a member of Kate Spade’s Board of Directors. He first joined Kate Spade in 2008 as Co-President and Chief Operating Officer and was named Chief Executive Officer in 2010. Mr. Leavitt led the successful $2.4 billion divestiture of Kate Spade & Company to Coach, Inc. in 2017 and integrated his team into the new company. Previously, Mr. Leavitt was President of Global Retail at Link Theory Holdings, a company that manufactures and sells contemporary clothing and accessories for men and women. At Link Theory Holdings, Mr. Leavitt was responsible for merchandising, operations, planning, allocation and real estate for the Theory and Helmut Lang retail businesses. He also spent several years at Diesel, an Italian retail clothing company, where he was most recently Executive Vice-President of Sales and Retail, and he spent 16 years at Polo Ralph Lauren, known for its clothing, marketing and distribution of products in apparel, home accessories and fragrances, where he held positions of increasing responsibility, including Executive Vice-President of Retail Concepts. Mr. Leavitt serves on the Boards of Directors of Build-A-Bear Workshop Inc., a global, interactive retail destination for creating customizable stuffed animals, where he is Non-Executive Chair, and Crate & Barrel, an industry-leading home furnishings specialty retailer. Mr. Leavitt holds a Bachelor of Arts Degree from Franklin & Marshall College.
Areas of Expertise:
Executive Leadership
International
Retail Sales/Distribution
Marketing/Advertising
Board/Committee Membership and Attendance in 2019(2)
 
Public Board Memberships
Board of Directors
100%
Build-A-Bear Workshop, Inc. - Retailer of plush animals
Audit and Finance Committee
100%
 
Compensation and Human Resources Committee
100%
 
 
 
 
Voting Results
In Favour
 
2019
98.25%
 
2018
99.98%
 
Securities Held
As at
  Common Shares(3)
DSUs(4)
Total Common
Shares and DSUs
Total Market Value
of Common Shares
and DSUs
(5)
Minimum Shareholding Requirement(6)
Meets Requirement
Mar. 4, 2020
Nil
 
5,199
5,199
$128,519
$540,000
No(12)
Mar. 6, 2019
Nil
 
2,029
2,029
$71,725
Change
Nil
 
3,170
3,170
$56,794




MANAGEMENT INFORMATION CIRCULAR 20


ELECTION OF DIRECTORS - NOMINEES


Anne Martin-Vachon
Age 58
Mississauga, Ontario, Canada
Director since February 2015
Independent(1)
Anne Martin-Vachon is the Chief Retail Officer for Rogers Communications Inc., a leading technology and media company providing wireless, residential and media to Canadians and Canadian businesses. Prior to her appointment in September 2019, Ms. Martin-Vachon served as President of Today's Shopping Choice, a division of Rogers Media for over three years. Before joining Rogers, Ms. Martin-Vachon held various executive positions in the consumer packaged goods and retail industry, including Chief Merchandising, Planning and Programming Officer at HSN, Inc., a leading interactive multi-channel entertainment and lifestyle retailer; Chief Marketing Officer at Nordstrom, Inc., a leading fashion specialty retailer operating 293 stores in 38 U.S. states; Chief Executive Officer at Lise Watier Cosmétiques, Inc., a Canadian-based beauty and skincare company; and Chief Marketing Officer at Bath & Body Works, LLC, which operates retail stores for personal care products. Ms. Martin-Vachon began her career at The Procter & Gamble Company, a multinational consumer goods company, where she spent more than 20 years in a variety of leadership positions across the company’s portfolio of beauty, personal care and household brands. Ms. Martin-Vachon holds a Master of Business Administration from McGill University and earned her Bachelor of Arts degree in business administration at the University of Québec in Trois-Rivières.
Areas of Expertise:
Retail Sales/Distribution
Marketing/Advertising
Strategy
Executive Leadership
Board/Committee Membership and Attendance in 2019(2)
Public Board Memberships
Board of Directors
100%
None
Corporate Governance and Social Responsibility Committee
100%
 
Compensation and Human Resources Committee
75%
 
 
 
 
Voting Results
In Favour
 
2019
96.70%
 
2018
99.73%
 
Securities Held
As at
Common Shares(3)
DSUs(4)
Total Common Shares and DSUs
Total Market Value of Common Shares and DSUs(5)
Minimum Shareholding Requirement(6)
Meets Requirements
Mar. 4, 2020
2,000

 
26,752
28,752
$710,749
$540,000
Yes
Mar. 6, 2019
2,000

 
21,164
23,164
$818,847
Change
Nil

 
5,588
5,588
($108,098)
(1)
“Independent” refers to the standards of independence established under Section 303A.02 of the New York Stock Exchange Listed Company Manual, Section 301 of the Sarbanes-Oxley Act of 2002 and Section 1.2 of the Canadian Securities Administrators’ National Instrument 58-101 (Disclosure of Corporate Governance Practices).
(2)
In addition to attending all meetings of the Board and its committees on which they sit, directors are encouraged to attend and, in practice, do attend other committee meetings on a non-voting basis. Directors are not paid additional fees for such attendance.
(3)
“Common Shares” refers to the number of Common Shares beneficially owned by the director, as at March 4, 2020 and March 6, 2019, respectively.
(4)
“DSUs” (as defined in the section entitled “Director Share Ownership Policy”) refers to the number of deferred share units held by the director as at March 4, 2020 and March 6, 2019, respectively.
(5)
“Total Market Value of Common Shares and DSUs” is determined by multiplying the closing price of the Common Shares on the New York Stock Exchange (“NYSE”) on each of March 4, 2020 ($24.72) and March 6, 2019 ($35.35), respectively, by the number of Common Shares and deferred share units held as at March 4, 2020 and March 6, 2019, respectively.
(6)
See the section entitled “Director Share Ownership Policy”. For Glenn J. Chamandy’s minimum share ownership requirement as President and Chief Executive Officer, see the section entitled “Executive Share Ownership Policy”.
(7)
Effective May 2, 2019, Donald C. Berg was appointed Chair of the Board. As Chair of the Board, Mr. Berg is not a member of any Board committee, although he attends all committee meetings on a non-voting basis.
(8)
Glenn J. Chamandy is not a member of the Board committees. He attends all committee meetings as a non-voting participant at the invitation of the committee chairs.
(9)
“Options Exercisable” refers to the number of Options (as defined under the section entitled “Long-Term Incentives”) awarded to Glenn J. Chamandy and which are exercisable as at March 4, 2020 and March 6, 2019, respectively.
(10)
“PSUs” refers to the number of PSUs (as such term is defined under the section entitled “Long-Term Incentives”) held by Glenn J. Chamandy as at March 4, 2020 and March 6, 2019, respectively.
(11)
The value of Common Shares is determined by multiplying the number of Common Shares held on March 4, 2020 and March 6, 2019, respectively, by the closing price of the Common Shares on the NYSE on March 4, 2020 ($24.72) and March 6, 2019 ($35.35), respectively, and the aggregate value of PSUs is determined by multiplying the number of PSUs held on March 4, 2020 and March 6, 2019, respectively, by the closing price of the Common Shares on the NYSE on March 4, 2020 ($24.72) and March 6, 2019 ($35.35), respectively. For the purposes of calculating the value of the PSUs, the PSUs are assumed to vest at target, which represents 100% of the number of PSUs held at the relevant date. The aggregate value of the PSU awards held as at March 4, 2020 and March 6, 2019 would amount to $30,495,927 and $33,136,666, respectively, assuming PSUs achieve maximum vesting of 200% of the number of PSUs held at the relevant date. The value of the exercisable Options at March 4, 2020 includes Options issued in Canadian dollars (for Option grants prior to 2017) and Options issued in U.S. dollars (for Option grants in 2017).  The value of the exercisable Options at March 6, 2019 only includes Options issued in Canadian dollars, as none of the Options issued in U.S. dollars were exercisable at that date. For the exercisable Options issued in Canadian dollars, the value is calculated based on the difference between the closing price of the Common Shares on the Toronto Stock Exchange (“TSX”) on March 4, 2020 (C$33.11) and on March 6, 2019 (C$47.47), respectively, and the exercise price of the Options, multiplied by the number of exercisable Options held as at March 4, 2020 and March 6, 2019, respectively. The aggregate value of Options is then converted to U.S. dollars using the Bank of Canada closing rate on March 4, 2020 (1.3392) and March 6, 2019 (1.3420), respectively. For the exercisable Options issued in U.S. dollars, the value is calculated based on the difference between the closing price of the Common Shares on the New York Stock Exchange (“NYSE”) on March 4, 2020 (US$29.55) and the exercise price of the Options, multiplied by the number of exercisable Options held as at March 4, 2020.
(12)
Maryse Bertrand, Marc Caira, Charles M. Herington and Craig A. Leavitt, who were appointed to the Board on May 3, 2018, have a period of five years to meet the minimum shareholding requirement. See the section entitled “Director Share Ownership Policy”.
(13)
Shirley E. Cunningham, who was appointed to the Board on May 4, 2017, has a period of five years to meet the minimum shareholding requirement. See the section entitled “Director Share Ownership Policy”.
(14)
Luc Jobin, who was appointed to the Board on February 18, 2020, has a period of five years to meet the minimum shareholding requirement. See the section entitled “Director Share Ownership Policy”.
(15)
249,245 Common Shares are owned directly by Glenn J. Chamandy and 2,970,000 are owned by an entity controlled by Mr. Chamandy.
(16)
1,560 Common Shares are owned indirectly by Mr. Caira’s grandchild.
(17)
12,000 Common Shares are owned directly by Mr. Goodman and 2,500 are owned indirectly by his spouse.
(18)
William D. Anderson was Chair of the Board until May 2, 2019. As Board Chair he was not a member of any Board committee, although he attended committee meetings on a non-voting basis.


MANAGEMENT INFORMATION CIRCULAR 21


ELECTION OF DIRECTORS - NOMINEES


No Common Directorships
As at March 4, 2020, except for Maryse Bertrand and Russell Goodman, who both sit on the Board of Directors of Metro Inc., no members of the Board of Directors served together on any outside boards. To maintain director independence and to avoid potential conflicts of interest, the Board reviews the number of board interlocks among its directors. Unless otherwise determined by the Board, no more than two directors may serve together on the board of another public company, and directors may not serve together on the boards of more than two other public companies.
Voting Results of 2019 Annual Meeting
The voting results for the election of directors at the 2019 annual meeting of shareholders of the Company were as follows:
Name
For
Withheld
Number
%
Number
%
William D. Anderson
166,985,650
99.77
383,555
0.23
Donald C. Berg
163,606,007
97.75
3,763,198
2.25
Maryse Bertrand
164,746,488
98.43
2,622,717
1.57
Marc Caira
161,964,927
96.77
5,404,278
3.23
Glenn J. Chamandy
167,211,733
99.91
157,472
0.09
Shirley E. Cunningham
164,442,506
98.25
2,926,699
1.75
Russell Goodman
162,454,564
97.06
4,914,641
2.94
Charles M. Herington
161,841,588
96.70
5,527,617
3.30
Craig A. Leavitt
164,439,760
98.25
2,929,445
1.75
Anne Martin-Vachon
161,845,029
96.70
5,524,176
3.30
Director Tenure
The following chart indicates the number of years each director has dedicated to the Company’s Board as at March 4, 2020:



MANAGEMENT INFORMATION CIRCULAR 22


COMPENSATION OF DIRECTORS


COMPENSATION OF DIRECTORS
The Company’s director compensation program is designed (i) to attract and retain the most qualified individuals to serve on the Board of Directors and its committees, (ii) to align the interests of the directors with the long-term interests of the Company’s shareholders, and (iii) to provide appropriate compensation for the risks and responsibilities related to being an effective director.
The Corporate Governance and Social Responsibility Committee is mandated by the Board to review regularly the amount and form of compensation of directors who are not employees or officers of the Company (“Outside Directors”).
In connection with these reviews, every second year, the Committee retains an outside consultant to benchmark the Company’s Outside Director compensation structure against market compensation data gathered from the same Proxy Reference Group (as defined in the section entitled “Benchmarking Practices”) used to benchmark executive compensation. Based on the results of the benchmarking review, the Corporate Governance and Social Responsibility Committee then recommends to the Board any adjustments to the Outside Directors’ compensation that may be necessary or appropriate to achieve the objectives of the Company’s director compensation program. Current Outside Director compensation levels are based on a review conducted in fiscal 2017.
In fiscal 2019, the Corporate Governance and Social Responsibility Committee retained Willis Towers Watson to perform the Outside Director compensation review using the updated Proxy Reference Group (as defined in the section entitled “Benchmarking Practices”) and the results of the review were presented to the Committee in October 2019. The Committee took the report under advisement but decided to revisit the matter during fiscal 2020 and make a final recommendation to the Board on Outside Director compensation at that time.
 
Annual Retainers and Attendance Fees
Annual retainers and attendance fees are paid to the Outside Directors on the following basis:
Type of Compensation
Annual Compensation Effective January
1, 2018
($)
Board Chair Retainer
325,000
(1) 
Board Retainer
180,000
(2) 
Committee Chair Retainer
 
 
- Audit and Finance
20,000
(3) 
- Compensation and Human Resources
20,000
(3) 
- Corporate Governance
10,000
 
Committee Member Retainer
 
 
- Audit and Finance
Nil
 
- Compensation and Human Resources
Nil
 
- Corporate Governance
Nil
 
Meeting Attendance Fees
 
 
- Board meeting
1,500
(4) 
- Committee meeting
1,500
(4) 
- Annual shareholders’ meeting
1,500
(4) 
(1)
Includes the Board and committee retainers and meeting attendance fees. Irrespective of whether the Board Chair has met the minimum share ownership requirements, $150,000 of the Board Chair retainer is paid in deferred share units. See the section entitled “Director Share Ownership Policy”.
(2)
$90,000 of the Board retainer is paid in deferred share units, irrespective of whether the director’s minimum share ownership requirements have been met. See the section entitled “Director Share Ownership Policy”.
(3)
$5,000 of the Audit and Finance Committee Chair retainer and $5,000 of the Compensation and Human Resources Committee Chair retainer, is paid in deferred share units, irrespective of whether the Committee Chair has met the minimum share ownership requirements.
(4)
All Outside Directors are paid meeting attendance fees except for the Board Chair, whose meeting attendance fees are included in the Board Chair retainer.
For a summary of the total compensation earned by each Outside Director during fiscal 2019 please refer to the section entitled “Total Compensation of Outside Directors”. The President and Chief Executive Officer is the only executive director of the Company and is not compensated in his capacity as a director. Outside Directors are reimbursed for travel and other out-of-pocket expenses incurred in attending Board or committee meetings and the annual shareholders’ meeting.
Since December 2001, as a matter of Company policy, the Board discontinued all grants of stock options to Outside Directors. In May 2006, the Board of Directors formally amended the Company’s Long Term Incentive Plan to exclude Outside Directors as eligible participants.
Director Share Ownership Policy
The Board of Directors believes that the economic interests of directors should be aligned with those of the Company’s shareholders. To achieve this, the Board has adopted a


MANAGEMENT INFORMATION CIRCULAR 23


COMPENSATION OF DIRECTORS


formal share ownership policy (the “Director Share Ownership Policy”) pursuant to which each Outside Director is expected to establish, over a period of five years, ownership of an amount of Common Shares and/or deferred share units (“DSUs”) which is equivalent in value to three times the annual Board retainer (based on the market value of the Common Shares on the NYSE), and subsequently maintain such minimum ownership position for the duration of his or her tenure as a director.
Furthermore, the Company’s Insider Trading Policy prohibits all insiders of the Company, including directors, from purchasing financial instruments, such as prepaid variable forward contracts, equity swaps, collars or units of exchange funds that are designed to monetize, hedge or offset a decrease in the market value of equity securities granted to such insiders as compensation or held directly or indirectly by the insider.
Deferred Share Unit Plan
The Company has adopted a deferred share unit plan (the “DSUP”) for the Outside Directors to align their economic interests with those of the Company’s shareholders and to assist them in meeting the requirements of the Director Share Ownership Policy. The DSUP became effective as of the first quarter of fiscal 2005.
During fiscal 2019, each Outside Director received DSUs valued on an annual basis at $90,000 out of a total annual Board retainer fee of $180,000. The Board Chair received DSUs valued on an annual basis at $150,000 out of a total annual Board Chair retainer fee of $325,000. In addition, the Audit and Finance Committee Chair and the Compensation and Human Resources Committee Chair received DSUs valued on an annual basis at $5,000 out of a total annual committee chair retainer fee of $20,000. See the section entitled “Annual Retainers and Attendance Fees”.
Under the DSUP, 50% of the Board retainer is paid in DSUs irrespective of whether the Outside Director has achieved the minimum shareholding requirement under the Director Share Ownership Policy. In addition, Outside Directors may elect to receive in the form of DSUs any or all of the remaining balance of the fees payable in respect of serving as a director.
Under the DSUP, Outside Directors are granted, as of the last day of each fiscal quarter of the Company, a number of DSUs determined on the basis of the amount of deferred remuneration payable to such director in respect of such quarter divided by the value of a DSU. The value of a DSU is based on the average of the closing prices of the Common Shares on the NYSE for the five trading days immediately preceding the date of the calculation (the “DSU Value”), which for this purpose is the last day of each fiscal quarter of the Company. DSUs granted under the DSUP will be redeemable, and the value thereof payable, only after the director ceases to act as a director of the Company.
 
Furthermore, the DSUP provides that Outside Directors will be credited with additional DSUs whenever cash dividends are paid on the Common Shares. The number of additional DSUs credited to an Outside Director in connection with the payment of dividends is determined on the basis of the amount of cash dividends that would have been paid to the Outside Director had his or her DSUs been Common Shares at the payment date divided by the DSU Value determined as at such date.


MANAGEMENT INFORMATION CIRCULAR 24


COMPENSATION OF DIRECTORS


 
 
 
 
 
Outstanding Share-Based Awards
The following table shows all share-based awards outstanding for each Outside Director as at the end of fiscal 2019:
Name
Share-Based Awards
Number of Shares or Units of
Shares That Have Not Vested(1)
(#)
Market or Payout Value of Share-Based Awards That Have Not Vested(2)
($)
William D. Anderson
60,289
1,781,540

 
Donald C. Berg
34,545
1,020,805

 
Maryse Bertrand
5,923
175,025

 
Marc Caira
10,660
315,003

 
Shirley E. Cunningham
16,554
489,171

 
Russell Goodman
37,932
1,120,891

 
Charles M. Herington
10,660
315,003

 
Craig A. Leavitt
5,199
153,630

 
Anne Martin-Vachon
26,752
790,522

 
(1)
The “Number of Shares or Units of Shares That Have Not Vested” represent all awards of DSUs outstanding at fiscal year-end, including the additional DSUs credited to the Outside Directors on the payment dates of the Company’s fiscal 2019 cash dividends on the Common Shares as provided in the DSUP (see the section entitled “Deferred Share Unit Plan”).
(2)
“Market or Payout Value of Share-Based Awards That Have Not Vested” is determined by multiplying the number of DSUs held at fiscal year-end by $29.55, the closing price of the Common Shares on the NYSE on December 27, 2019, the last trading day prior to fiscal year-end.
Total Compensation of Outside Directors
The table below reflects in detail the total compensation earned by each Outside Director during the fiscal year ended December 29, 2019:
Name
Fees Earned (1)
Share-Based Awards(2)
Total
Retainer
Attendance
($)
($)
($)
($)
William D. Anderson
118,722

10,500

110,275

239,497

Donald C. Berg


293,261

293,261

Maryse Bertrand
77,297

19,200

114,124

210,621

Marc Caira


204,000

204,000

Shirley E. Cunningham


217,242

217,242

Russell Goodman
84,000

24,000

116,000

224,000

George Heller(3)


69,824

69,824

Charles M. Herington


204,000

204,000

Craig A. Leavitt
78,750

20,250

105,000

204,000

Anne Martin-Vachon

21,000

180,000

201,000

Gonzalo F. Valdes-Fauli(3)
33,791

9,000

30,412

73,203

(1)
These amounts represent the portion of the retainer and attendance fees paid in cash to the Outside Directors.
(2)
These amounts represent the cash value of the portion of the retainer and attendance fees paid in DSUs to the Outside Directors. A portion of the retainer fees is paid in DSUs to all Outside Directors (see the section entitled “Annual Retainers and Attendance Fees”). Certain Outside Directors have elected under the DSUP to receive some or all of the remaining balance of their retainer and attendance fees in DSUs.
(3)
George Heller and Gonzalo F. Valdes-Fauli retired from the Board effective May 2, 2019.


MANAGEMENT INFORMATION CIRCULAR 25

COMPENSATION DISCUSSION AND ANALYSIS

COMPENSATION DISCUSSION AND ANALYSIS
A Message from the Compensation and Human Resources Committee
Dear shareholders,
On behalf of the Compensation and Human Resources Committee and the Board of Directors, we are pleased to share with you Gildan’s fiscal 2019 Compensation Discussion and Analysis. Although 2019 was a challenging year, we were pleased with the overall progress the Company made on its “Back to Basics” strategy. Gildan stayed focused on the execution of several optimization initiatives to simplify its business and we are confident that these actions will strengthen Gildan’s competitive position and help drive growth in the future.
As a reminder, Gildan’s compensation objectives are to attract, motivate and retain high performing executive officers, encourage and reward superior performance, and align our executives’ interests with those of the Company’s shareholders. As a Committee, our role is to carry out the Board’s overall responsibility for executive compensation as well as to oversee executive officers’ performance assessment, succession planning and overall compensation.
2019 Company Performance Highlights
Although 2019 was a challenging year relative to initial financial expectations, the management team executed on important Back to Basics initiatives aimed at leveraging Gildan’s core competencies and improving its long term competitive positioning. During fiscal 2019, the Company:
Achieved $2.82 billion in revenue
Generated $227million in free cash flow
Returned $368 million to shareholders
Drove important manufacturing cost improvements
Consolidated sheer hosiery manufacturing in Canada
Removed higher cost sewing capacity
Implemented plans to relocate higher cost textile and sewing operations in Mexico to Central America and the Caribbean Basin
Initiated development, with the acquisition of a large parcel of land, for a new major multi-plant manufacturing complex in Bangladesh to service international markets and support other key sales growth drivers
Simplified Gildan’s product portfolio
Announced a significant reduction in imprintables product line stock-keeping units (SKUs) to reduce complexity in manufacturing, remove higher distribution costs associated with shipping low-volume orders, and reduce working capital requirements
Optimized Gildan’s distribution network and infrastructure
Closed smaller less efficient warehouses
Announced the exit of ship-to-the piece activities to remove costs and complexity in distribution
Reduced overall SG&A as a percent of sales to 12.1%
2019 Executive Compensation Highlights
Despite these achievements, given the Company’s overall fiscal 2019 performance, the portion of the annual short-term incentive plan for executive officers that is tied to financial measures did not generate any payout, with both adjusted earnings per share and revenue falling below their respective threshold payout levels. The other portion of the annual short-term incentive plan, which represents 20% of the annual award for the President and Chief Executive Officer, the Executive Vice-President, Chief Financial and Administrative Officer, and our two Group Presidents, and which represents 35% for our Senior Vice-President, Yarn Spinning, is based on pre-defined strategic and operational objectives, including succession planning objectives. Accordingly, we reviewed management’s performance against these objectives and determined that the payout for this portion of the annual award would be at 100%, with the result that the President and Chief Executive Officer, the Executive Vice-President, Chief


MANAGEMENT INFORMATION CIRCULAR 26

COMPENSATION DISCUSSION AND ANALYSIS

Financial and Administrative Officer, and the two Group Presidents would each receive an overall payout of 20% of their target incentive and the Senior Vice-President, Yarn Spinning would receive an overall payout of 35% of his target incentive.
Also, the fiscal 2016 long-term incentive awards, comprised of three-year non-treasury performance-based restricted share units (“PSUs”) granted to the President and Chief Executive Officer, the Executive Vice-President, Chief Financial and Administrative Officer, and the two Group Presidents, vested at 180% of target. This result reflected the achievement of average return on assets for the three-year vesting period at the 89th percentile of companies in the S&P/TSX Capped Consumer Discretionary Index, excluding income trusts, at the time of grant, and is aligned with our policy of providing top quartile compensation when Company performance is also top quartile for the measurement period.
Executive Compensation Decisions
During 2019, the Compensation and Human Resources Committee, with the support of our compensation consultant, Willis Towers Watson (“WTW”), continued our broad review of the Company’s executive compensation program to ensure that it continues to achieve the objectives of attracting, motivating and retaining high performing executive officers, encouraging and rewarding superior performance, and aligning our executives’ interests with those of Gildan’s shareholders. This led to the following important decisions:
Introduced post-retirement share ownership guidelines for the CEO. During fiscal 2019, based on the results of a benchmarking exercise conducted by WTW, we amended the Executive Share Ownership Policy to extend the share ownership requirement for the President and Chief Executive Officer for one year following his retirement from the Company to further align his interests with those of Gildan’s shareholders.
Reviewed the Clawback Policy. We engaged WTW to conduct a benchmark of prevalent practices with regards to clawback provisions in Canada and the United States. Based on the results of the benchmarking, we amended the Clawback Policy to extend the time period covered by the Policy from 24 to 36 months.
Reviewed the compensation peer group of companies. During fiscal 2019, we mandated WTW to conduct a review of Gildan’s Proxy Reference Group (as defined in the section entitled “Benchmarking Practices”) to ensure that the group is in line with our agreed selection criteria in anticipation of the compensation review for fiscal 2020. Based on the analysis, we concluded that while all the current constituents continued to meet the selection criteria for the Proxy Reference Group, we decided it would be appropriate to increase the size of the group from 16 to 17 companies so as to further minimize the impact of year-over-year changes by individual companies in the group. Accordingly, we added Levi Strauss & Co., which we were able to confirm would not have a significant impact on median market compensation results.
Benchmarked executive pay. At the beginning of fiscal 2019, we conducted a benchmarking of the overall compensation of the President and Chief Executive Officer, the Executive Vice-President, Chief Financial and Administrative Officer, and the Group Presidents relative to the Proxy Reference Group, and of the Senior Vice-President, Yarn Spinning relative to both the Proxy Reference Group and other benchmarks. Based on the results of the benchmarking study, we made the following decisions to better align our executive officers’ compensation with the median of the market in accordance with our compensation philosophy:
Although we did not adjust the base salary of the President and Chief Executive Officer during fiscal 2019 due to his positioning relative to the market median on that component, we adjusted his long-term incentive target from 400% to 450% of his base salary to better align his total compensation with the market median.
We adjusted the base salaries of the other executive officers on a case by case basis, effective as of March 1, 2019, as part of Gildan’s global salary increase process, considering their positioning relative to the market median as well as their levels of responsibility. No adjustments were made to either their short-term or long-term incentive components, except for the long-term incentive target for the Senior Vice-President, Yarn Spinning, which was adjusted from 40% to 50% of his base salary.
Changes of measures and weightings in the short-term and long-term incentive plans. At the beginning of fiscal 2019, we modified the metrics and weightings in the SCORES short-term incentive plan and for the PSUs granted under the Company’s Long Term Incentive Plan (the “LTIP”).
With respect to the SCORES short-term incentive plan:
The return on net assets metric was replaced by revenue to put emphasis on top-line growth and we retained the adjusted EPS metric. Both metrics are equally weighted.


MANAGEMENT INFORMATION CIRCULAR 27

COMPENSATION DISCUSSION AND ANALYSIS

The incentive zone was also narrowed to create a higher pay-for-performance orientation.
For purposes of the PSUs granted under the LTIP, the weighting of the return on net assets metric was adjusted from 1/3 to 50% and the adjusted EPS and revenue metrics were each adjusted from 1/3 to 25%.
Looking Ahead
In 2020, we plan to continue to build on our strong foundation of sound and effective pay and governance practices. We will continue to regularly test the linkage between executive pay and Company performance and monitor the evolution of market best practices. This includes benchmarking our executive pay against comparable peers to ensure we provide competitive compensation, ensuring that the short-term and long-term incentive plans continue to be adequately tied to the expected business results, and maintaining appropriate clawback and anti-hedging policies and stock ownership guidelines.
We are confident that our executive compensation program and our pay-related decisions strike the right balance between earning the loyalty of talented executive officers and incentivizing strong performance, while ensuring strong ties to the Company’s performance. We strive to provide our shareholders clear and relevant information about our approach to executive compensation, and we ask you to read the following pages to gain a deeper understanding of our compensation practices.
For each of the past four years, over 90% of shareholders have demonstrated their support for our executive pay program by voting in favour of our annual say on pay proposal. This year we are holding our ninth say-on-pay vote and we want you to know that your input is important to us and we encourage you to cast your vote. The Compensation and Human Resources Committee and the Board of Directors value your input on pay and governance matters and Board and Committee members will be present at the Meeting to answer your questions.
We believe that the Company’s future is in good hands, and that our executive officers and our employees have the best interest of all our stakeholders at heart.
Sincerely,
Shirley E. Cunningham
Donald C. Berg
Chair of the Compensation and Human Resources Committee
Chair of the Board of Directors


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COMPENSATION DISCUSSION AND ANALYSIS

 
 
 
 
 
Determining Compensation
Compensation and Human Resources Committee
The primary role of the Compensation and Human Resources Committee is to carry out the Board’s overall responsibility for executive compensation at Gildan. Under its mandate, the Committee is responsible for monitoring executive officers’ performance assessment, succession planning and overall compensation. The Committee recommends the appointment of executive officers, including the terms and conditions of their appointment and termination, and reviews the evaluation of their performance, including recommending their compensation. The Committee also oversees the existence of appropriate human resources systems, policies and compensation structures so that the Company can attract, motivate and retain executive officers who exhibit high standards of integrity, competence and performance. The Compensation and Human Resources Committee oversees risk identification and management in relation to compensation policies and practices and, on an annual basis, identifies and assesses the risks associated with each component of the executive officers’ overall compensation. Finally, the
 
Committee is responsible for developing a compensation philosophy and objectives that reward the creation of shareholder value while reflecting an appropriate balance between the short-term and longer-term performance of the Company. The mandate of the Committee is available on Gildan’s website at www.gildan.com.
At the end of the most recently completed fiscal year, the Compensation and Human Resources Committee was composed of six directors, all of whom are independent directors, namely Shirley E. Cunningham (Chair), William D. Anderson, Russell Goodman, Charles M. Herington, Craig A. Leavitt and Anne Martin-Vachon. Luc Jobin, who was appointed to the Board in February 2020, is also now a member of the Committee. None of the members of the Committee is an acting chief executive officer of another company. The Board of Directors believes that the Committee collectively has the knowledge, experience and background required to fulfill its mandate.

William D. Anderson has had a career as a business leader in Canada spanning over 30 years. He joined the Bell Canada organization in 1992, where from 1998 to 2001 Mr. Anderson served as Chief Financial Officer of BCE, Inc. He currently serves as Chair of the Board of Directors of Sun Life Financial Inc.
Shirley E. Cunningham, Chair of the Committee since May 2, 2019, is a senior executive with more than 25 years of experience in a variety of leadership positions in the global food and agriculture industry. In her role as Executive Vice-President and Chief Operating Officer, Ag Business and Enterprise Strategy for CHS Inc., Ms. Cunningham had overall responsibility for human resources and compensation matters.
Russell Goodman is a member of various boards of directors, including the Board of Directors of Metro Inc., where he is Chair of the Audit Committee and the Board of Directors of Northland Power Inc., where he is Lead Independent Director, Chair of the Audit Committee and member of the Compensation Committee. As Chair of Gildans Audit and Finance Committee, Mr. Goodman is required to sit on the Compensation and Human Resources Committee.
 
Charles M. Herington is a senior executive and is a member of various boards of directors, most notably the Board of Directors of Molson Coors Brewing Company, where he sat on the Compensation and Human Resources Committee, and the Board of Directors of Klox Technologies, where he is Chair of the Compensation Committee.
Craig A. Leavitt is a corporate director of public, private and not-for-profit companies, and has more than 25 years of experience in a variety of leadership positions in the clothing and accessories industry. In his role as Chief Executive Officer of Kate Spade & Company, Mr. Leavitt had overall responsibility for human resources and compensation matters.
Anne Martin-Vachon is a senior executive with more than 25 years of experience in a variety of leadership positions in the consumer packaged goods and retail industry. In her various leadership roles, including as Chief Retail Officer at Rogers Communications Inc., she has had overall responsibility for human resources and compensation matters.




MANAGEMENT INFORMATION CIRCULAR 29

COMPENSATION DISCUSSION AND ANALYSIS

 
 
 
 
 
Compensation Consultant
As provided in its mandate, the Compensation and Human Resources Committee has the authority to retain compensation consultants and approve their fees.
In October 2018, the Committee retained WTW to assist the Committee in matters related to corporate governance and executive compensation. Until September 2018, Mercer (Canada) Limited (“Mercer”) was assisting the Committee in respect of such matters.
As part of its mandate, WTW assists the Committee in determining and benchmarking compensation for the Company’s executive officers and Outside Directors, ensuring that the various elements of the compensation package orient their efforts and behaviours toward the goals that have been set, and ensuring that their total compensation is market competitive.
Executive Compensation-Related Work
During fiscal 2019, the Committee retained WTW to conduct a review of the companies included in the compensation peer group, to perform a benchmarking and analysis of both the executive officers’ and Outside Directors’ compensation, to assist the Committee in assessing the financial performance goals of the Company’s incentive plans and to provide an overview of current and emerging governance and executive compensation trends. WTW also provided ad hoc analytical and advisory support to the Committee on other matters relating to executive compensation. In addition, the Committee retained WTW to provide a review of the compensation risk assessment, a review and analysis of certain governance components, such as post-retirement share ownership guidelines, the clawback policy and change of control provisions under the LTIP.
All Other Work
The Compensation and Human Resources Committee pre-approves any services that its consultant (or its affiliates) provides to the Company at the request of management.
During fiscal 2019, WTW completed the research and benchmark of Gildan's total direct compensation for certain vice-president level positions across the organization. The Company also purchases, from time to time, certain standard survey results for its employment markets.
 
The aggregate fees paid to WTW and Mercer for executive compensation-related services and all other services provided during fiscal 2019 and 2018 were as follows:
 
 
Fiscal 2019
Fiscal 2018
 
Type of Fee
Willis Towers Watson fees (C$)
Mercer fees (C$)
Willis Towers Watson fees (C$)
Mercer fees (C$)
 
 
Executive Compensation-Related Fees
473,215


73,399

109,505

 
All Other Fees
72,090


124,279

4,637

 
 Total
545,305


197,678

114,142

Due to the policies and procedures that WTW (and previously Mercer) and the Compensation and Human Resources Committee have established, the Committee is confident that the advice it receives from the individual executive compensation consultant at WTW is objective and not influenced by WTW’s relationships with the Company. These policies and procedures include the following:

The individual consultant receives no incentive or other compensation based on the fees charged to the Company for other services provided by WTW;
The individual consultant is not responsible for selling other WTW services to the Company, as applicable;
WTW’s professional standards prohibit the respective individual consultant from considering any other relationships WTW may have with the Company in rendering his or her advice and recommendations;
The Committee has the sole authority to retain and terminate the individual consultant;
The individual consultant has direct access to the Committee without management intervention;
The Committee evaluates the quality and objectivity of the services provided by the individual consultant each year and determines whether to continue to retain the individual consultant; and
The Committee has adopted protocols governing if and when the individual consultant’s advice and recommendations can be shared with management.
While the Compensation and Human Resources Committee may rely on external information and advice, all of the decisions with respect to executive compensation are made by the Committee alone and may reflect factors and considerations other than, or that may differ from, the information and recommendations provided by WTW.


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COMPENSATION DISCUSSION AND ANALYSIS

Shareholder Advisory Vote on Executive Compensation
As part of Gildan’s commitment to strong corporate governance practices and shareholder engagement, we have held an advisory vote on our approach to executive compensation at every annual general meeting of
 
shareholders since 2011. The purpose of the say on pay advisory vote is to provide our shareholders with the opportunity to indicate their support for the Company’s approach to executive compensation. At the 2018 and 2019 annual general meetings, Gildan’s approach to executive compensation was approved with 91.17% and 93.71%, respectively, of the shares voted at the meeting.
 
 
 
 
 
Our Executive Compensation Practices
Compensation Philosophy and Objectives
Gildan’s executive compensation program is intended to attract, motivate and retain high performing executive officers, encourage and reward superior performance, and align our executives’ interests with those of the Company’s shareholders by:
Providing the opportunity for total compensation that is competitive with the compensation received by executive officers employed by a group of comparable North American companies;
Ensuring that a significant proportion of executive compensation is linked to performance through the Company’s variable compensation plans; and
Providing executive officers with long-term equity-based incentive plans, such as PSUs, which also help to ensure that executive officers meet or exceed minimum share ownership requirements.
 
 
 
 
 
Executive Compensation Practices
In order to implement our compensation philosophy and achieve our objectives, we have adopted a number of best practices, including:
Key Features of our Compensation Program
Ÿ
Annual incentive awards are subject to achievement of pre-established performance goals tied to both financial and qualitative objectives
Ÿ
Significant proportion of executive officers’ annual target compensation is “at-risk”
Ÿ
Amount that an executive officer can receive under the short-term incentive plan is capped at two times target
Ÿ
No minimum guaranteed payout under the short-term incentive plan
Ÿ
Long-term incentive plan equity awards are designed to encourage a long-term view of performance
Ÿ
No hedging or monetizing of equity awards by executives
Ÿ
Use of an independent compensation consultant
Ÿ
No excessive perquisites
Ÿ
Use of stress-testing and back-testing to assess alignment between pay and performance
Ÿ
PSU payouts under the long-term incentive plan is capped at two times target
Ÿ
Use of representative and relevant peer group
Ÿ
Annual advisory vote on executive compensation
Ÿ
Clawback Policy for executive officer incentive-based compensation
Ÿ
Minimum share ownership guidelines for executives
Ÿ
Post-retirement share ownership guidelines for the President and Chief Executive Officer



MANAGEMENT INFORMATION CIRCULAR 31

COMPENSATION DISCUSSION AND ANALYSIS

The following charts illustrate that a significant portion of our executive officers’ target compensation is at-risk. In fiscal 2019, 84% of the target compensation of the President and Chief Executive Officer and 68% of the target compensation of the other executive officers was at-risk.
Long-Term Incentive
100% of the LTIP awards of the President and Chief Executive Officer, the Executive Vice-President and Chief Financial and Administrative Officer, the President, Sales, Marketing and Distribution and the President, Manufacturing and 50% of the LTIP awards of the Senior Vice-President, Yarn Spinning are based on PSUs that are conditional upon meeting financial performance targets tied to the Company's strategic plan.
Short-Term Incentive
80% of the short-term incentive payout of the President and Chief Executive Officer, the Executive Vice-President and Chief Financial and Administrative Officer, the President, Sales, Marketing and Distribution and the President, Manufacturing and 65% of the short-term incentive payout of the Senior Vice-President, Yarn Spinning is conditional upon the attainment of pre-determined financial metrics (adjusted earnings per share and revenues).
As our executive compensation program is designed to align pay to performance, we compared our President and Chief Executive Officer’s target pay to his realizable pay over periods of three fiscal years each. The analysis below shows how intended pay has been impacted by Company performance:


MANAGEMENT INFORMATION CIRCULAR 32

COMPENSATION DISCUSSION AND ANALYSIS


The analysis above demonstrates good alignment between executive pay and Company performance. During the 2013-2015 period, where the average total shareholder return exceeded 37%, our President and Chief Executive Officer’s three-year average realizable pay significantly exceeded his target pay, which is fully consistent with our approach of tying a significant portion of total direct compensation to the attainment of performance objectives and value creation. For the following three measurement periods, where average total shareholder returns were between 3.1% and 13.2%, the President and Chief Executive Officer’s average realizable pay was closer to target pay, being slightly lower for the 2014-2016 period and slightly higher for the 2015-2017 and 2016-2018 periods. The lower realizable pay for the 2014-2016 period is mainly due to a lower share price at the end of the measurement period in fiscal 2016, which impacted the realizable value of unexercised stock options and a lower short-term incentive average payout in comparison to the 2015-2017 and 2016-2018 periods. For the 2017-2019 period, where the average total shareholder return was 6%, the average realizable pay was lower than the average target pay mainly due to the lower annual bonus payout for fiscal 2019 and the lower overall value of the share-based compensation at the end of the period.
For the purpose of the analysis, we defined “target pay” as the sum of base salary, target short-term incentives and target long-term incentives, and we defined “realizable pay” as the sum of the following compensation elements:
Compensation Element
Treatment of Compensation Element
 Base salary
 Salary received
 Annual incentive
 Annual bonus paid during the period
PSUs
 Value of awards granted during the period that vested and were paid out during the period
 Value of unvested awards granted during the period, calculated on the last day of the period assuming 100% vesting
 Stock options
 Value of gains realized upon exercise of options granted during the period
 In-the-money value of unvested or unexercised options granted during the period, calculated on the last day of the period
New hire or one-time awards and all other compensation
 Excluded from the calculation
 
 
 
 
 
Benchmarking Practices
To meet the Company’s objectives of providing market competitive compensation opportunities, Gildan’s executive officer compensation plans are benchmarked against market compensation data gathered from organizations of comparable size, complexity and geographical scope, as well as other companies with which the Company competes for executive talent.
The Company’s executive compensation policy is to use the market median with the potential of top quartile total compensation when individual and Company performance are also at top quartile. The Compensation and Human Resources Committee uses discretion and judgement when determining actual compensation levels. Individual compensation may be positioned above or below median, based on individual experience and performance or other criteria deemed important by the Committee. At the beginning of fiscal 2019, relative to the benchmarking results, the Company’s executive officers’ total direct compensation opportunity is positioned slightly below the market median for the President and Chief Executive Officer and the Senior Vice-President, Yarn Spinning and in the range of the market median for the other executive officer positions.
As part of the benchmarking process, the Compensation and Human Resources Committee reviews compensation data gathered from proxy circulars of other publicly-traded companies (the “Proxy Reference Group”). In addition, the Committee may also consider information gathered from annual compensation planning surveys from a range of outside consulting firms in connection with determining annual salary increases for executive officers. The composition of the Proxy Reference Group is reviewed regularly by the Compensation and Human Resources Committee for its ongoing business relevance to the Company and changes are made as deemed appropriate. From time to time, the Committee engages its compensation consultant to review the composition of the Proxy Reference Group and provide recommendations to the Committee. The Committee used the Proxy Reference Group with respect to the positions of the President and Chief Executive Officer, the Executive Vice-President and Chief Financial and Administrative Officer, the President, Sales, Marketing and Distribution and the President, Manufacturing and relied on both the Proxy Reference Group and the periodical vice-president level benchmarking conducted by its compensation consultant for the Senior Vice-President, Yarn Spinning.



MANAGEMENT INFORMATION CIRCULAR 33

COMPENSATION DISCUSSION AND ANALYSIS

The following table provides an overview of the characteristics of the Proxy Reference Group:
(All values in $ millions)
 
Gildan Activewear Inc.
Proxy Reference Group(1)
Location
Canada
North America
Industry Sector
Textiles and Apparel
Apparel, Accessories & Luxury Goods
Revenues ($)
Preceding 12 months
2,824

(2) 
4,981

 
Market Capitalization ($)
As at December 31, 2019
5,901

(3) 
7,106

 
Enterprise Value ($)
As at December 31, 2019
6,873

(3) 
10,034

 
Net income ($)
Preceding 12 months
260

(2) 
535

 
(1)
The financial data for the Proxy Reference Group are from the S&P Capital IQ database and represent the median of the group on December 31, 2019, for the most recently reported 12-month revenue and net income.
(2)
The revenues and net income for the Company are based on its results for fiscal 2019.
(3)
The market capitalization and enterprise value of the Company are from the S&P Capital IQ database.
Both the industry sector and location are considered relevant in selecting comparators, as Gildan competes directly with these organizations for customers, revenue, executive talent and capital.
Taking into consideration these factors, the following selection criteria were used to determine the Proxy Reference Group:
Companies that are headquartered in North America and that are listed on a Canadian or U.S. exchange;
Revenue, market capitalization, enterprise value and net income, generally in a range of 50% to 200% of Gildan; and
Global Industry Classification Standard (GICS) sub-industry classification of Apparel, Accessories & Luxury Goods and companies from other classifications, such as consumer products companies with similar customers and business model to Gildan.
As a result, the Proxy Reference Group which served as a basis for the establishment of compensation for fiscal 2019 is composed of the 16 companies set forth below. The Compensation and Human Resources Committee believes that this peer group, which includes organizations with vertically integrated business models similar to Gildan, is appropriate for setting the Company’s executive officer pay given the scope of Gildan’s target markets and operations both in the U.S. and globally, the talent market for Gildan’s executive officers, which is primarily outside of Canada, and a lack of comparably-sized reference apparel companies in Canada. U.S. domiciled companies dominate the peer group because of the global scope of Gildan’s operations and the importance of the U.S. market to Gildan’s business. The vast majority of Gildan’s customers, as well as its direct competitors, are located in the United States. In this regard, Gildan’s functional currency is U.S. dollars and approximately 85% of Gildan’s revenues were generated in the United States in fiscal 2019.
Proxy Reference Group
Capri Holdings Limited
lululemon athletica inc.
Carter’s Inc.
Mattel, Inc.
Church & Dwight Co., Inc.
Phillips Van Heusen Corp.
Cintas Corp
Ralph Lauren Corp.
Columbia Sportswear Co.
Skechers USA, Inc.
Edgewell Personal Care Company
Spectrum Brands Holdings, Inc.
Hanesbrands Inc.
Tapestry, Inc.
Hasbro Inc.
Under Armour, Inc.
During fiscal 2019, the Compensation and Human Resources Committee mandated WTW to conduct a review of the Proxy Reference Group to ensure that the group is in line with the above-mentioned selection criteria in anticipation of the compensation review for fiscal 2020. Based on the analysis, the Committee concluded that while all the current constituents continued to meet the selection criteria for the Proxy Reference Group, the Committee decided to increase the size of the group from 16 to 17 companies so as to further minimize the impact of year-over-year changes by individual companies in the group. Accordingly, the Committee added Levi Strauss & Co., which the Committee was able to confirm would not have a significant impact on the median market compensation results.


MANAGEMENT INFORMATION CIRCULAR 34

COMPENSATION DISCUSSION AND ANALYSIS

 
 
 
 
 
Performance Graph
Cumulative Value of a C$100 Investment
The following graph compares the cumulative total shareholder return on an investment of C$100 in Common Shares made on October 5, 2014 with the cumulative total return of the S&P/TSX Composite Index, assuming the reinvestment of all dividends.
A significant portion of the Company’s revenues are generated in U.S. dollars and its financial statements are expressed in U.S. dollars. As such, a change in value of the Canadian dollar relative to the U.S. dollar can have an effect on the value of the Company’s Canadian dollar denominated Common Shares.

October 5, 2014
January 3, 2016
January 1, 2017
December 31, 2017
December 30, 2018
December 29, 2019
Company (C$) - Total Return
$100
$131
$114
$139
$143
$136
S&P/TSX Composite Index Total Return (C$)
$100
$91
$111
$121
$109
$136


MANAGEMENT INFORMATION CIRCULAR 35

COMPENSATION DISCUSSION AND ANALYSIS

Cumulative Value of a $100 Investment
The following graph compares the cumulative total shareholder return on an investment of $100 in Common Shares made on October 5, 2014 with the cumulative total return of the S&P 500 Composite Index, assuming the reinvestment of all dividends.
 
October 5, 2014
January 3, 2016
January 1, 2017
December 31, 2017
December 30, 2018
December 29, 2019
Company (US$) - Total Return
$100
$106
$96
$124
$118
$117
S&P 500 Composite Index Total Return (US$)
$100
$107
$119
$145
$138
$183
Gildan’s total shareholder return over the five-year period shows an overall upward trend, with a slight decrease in 2016. Over the same five-year period, the total compensation earned by the executive officers decreased in fiscal 2016 compared to fiscal 2015 as a result of the fifteen-month reporting period in fiscal 2015 which included two annual long-term incentive awards and a one-time equity grant to our Executive Vice-President, Chief Financial and Administrative Officer. The total compensation increased in the following year when bonuses paid at 127% of target and then remained generally stable between fiscal 2017 and fiscal 2018. Finally, the total compensation decreased in 2019 as bonuses paid under the annual short-term incentive plan were below target.
It should be noted that total compensation may fluctuate year over year, not always following the trend in total shareholder returns, due to the following factors:
Executive officers’ base salary adjustments are generally made to remain competitive with the Proxy Reference Group and to reflect any changes in the scope of the executives’ responsibilities;
Short-term incentive payouts are not directly linked to total shareholder return but rather they are based on underlying financial measures (i.e. adjusted earnings per share and revenue); and
While long-term incentive grants are typically made at market-competitive target levels, occasional one-time equity grants may cause significant year-over-year fluctuations in total compensation. The value ultimately realized from long-term incentive awards depends on achievement against performance measures (in the case of PSUs) and share price performance.


MANAGEMENT INFORMATION CIRCULAR 36

COMPENSATION DISCUSSION AND ANALYSIS

 
 
 
 
 
President and CEO Compensation Lookback
The table below compares the total direct compensation awarded to our President and Chief Executive Officer, as reported in the Summary Compensation Table for each of the last five fiscal years, to the actual value of that compensation as at the last day of fiscal 2019. The table also compares the actual value for each C$100 of compensation awarded to the value created for Gildan’s shareholders over the same period. Values are expressed in Canadian dollars since the President and Chief Executive Officer’s compensation was set in Canadian dollars until the end of fiscal 2016.
Fiscal Year of Awarded Compensation
Total Direct Compensation Awarded (1)
(C$)
Actual Value as at December 29, 2019 (2)
(C$)
Period
Value of C$100
To Shareholders
(C$)
To CEO
(C$)
2015
9,042,245
13,255,745
 Oct 6, 2014 to Dec 29, 2019
136.10
146.60
2016
6,907,646
10,122,705
 Jan 4, 2016 to Dec 29, 2019
104.21
146.54
2017
10,030,329
7,599,621
 Jan 2, 2017 to Dec 29, 2019
118.96
75.77
2018
10,637,640
10,517,720
 Jan 1, 2018 to Dec 29, 2019
98.15
98.87
2019
9,102,288
8,081,772
 Dec 31, 2018 to Dec 29, 2019
95.20
88.79
(1)
Includes base salary received, annual bonus paid and value of equity awards granted, as reported in the Summary Compensation Table for each fiscal year. For fiscal years 2017, 2018 and 2019, amounts have been converted to Canadian dollars using the Bank of Canada closing rates on the last trading day of the fiscal year, which were 1.2545, 1.3638 and 1.3078 respectively.
(2)
Includes base salary received and annual bonus paid for that fiscal year, vested value of PSU awards granted during that fiscal year, the value of unvested PSU awards granted during that fiscal year as at December 29, 2019, assuming 100% vesting, and for the stock options granted in that particular year, the value of gains realized upon exercise of options and the in-the-money value of unexercised options as at December 29, 2019. For fiscal 2017, 2018 and 2019, amounts have been converted to Canadian dollars using the Bank of Canada closing rates on the last trading day of the fiscal year, which were 1.2545, 1.3638 and 1.3078 respectively. Unvested PSUs and options denominated in U.S. dollars that are valued as at December 29, 2019 are converted to Canadian dollars, using the Bank of Canada closing rate on December 27, 2019, the last trading day of the fiscal year, which was 1.3078.
The President and Chief Executive Officer’s compensation is closely aligned to the value created for Gildan’s shareholders. This is consistent with having a significant proportion of Mr. Chamandy’s pay consisting of variable compensation and is aligned with our philosophy of linking pay with Company performance. The difference between the value to shareholders and the value to the President and Chief Executive Officer for fiscal 2016 and 2017 is mainly explained by the timing of the annual LTIP awards, which for fiscal 2016 and 2017 occurred in November, being several months after the starting point of the measurement period, thus allowing for greater variance in share price. For fiscal 2018 and 2019, the LTIP awards occurred in February and were therefore more aligned to the measurement period.


MANAGEMENT INFORMATION CIRCULAR 37

COMPENSATION DISCUSSION AND ANALYSIS

 
 
 
 
 
Our Named Executive Officers
Below is a description of each of the individuals who form our current executive officer team, which include our President and Chief Executive Officer, our Executive Vice-President, Chief Financial and Administrative Officer, and our three other most highly compensated executive officers as of December 29, 2019 (“Named Executive Officers” or “NEOs”). Detailed information about the compensation awarded to our Named Executive Officers in 2019, 2018 and 2017 can be found in the section entitled “Summary Compensation Table”.
Glenn J. Chamandy
President and Chief Executive Officer
Glenn J. Chamandy is one of the founding members of Gildan and has devoted his entire career to building Gildan into an industry leader. He became President and Chief Executive Officer in August 2004. Mr. Chamandy is responsible for providing leadership and vision to Gildan, as well as setting the strategic direction in line with shareholders’ interests. Since the Company became public in June 1998, its equity market capitalization has increased from approximately $70 million to $5.9 billion as at December 29, 2019.
Fiscal 2019 Highlights
Continued execution on Gildan’s “Back to Basics” strategy
Delivered net sales of $2.8 billion, net earnings of $259 million and free cash flow of $227 million
Drove optimization initiatives aimed at simplifying the business and strengthening Gildan’s competitive position
Fiscal 2019 Direct Compensation
Salary
Short-Term Incentive
Long-Term Incentives
Total Direct Compensation
($)
($)
($)
($)
1,200,000
360,000
5,399,970
6,959,970
Equity Ownership as at December 29, 2019(1)
Common Shares
RSUs
Minimum Shareholding Requirement
Meets Requirement
(#)(2)
($)
(#)
($)
3,219,245
100,358,326
408,342
12,729,854
6 x Base Salary
Yes

Rhodri J. Harries
Executive Vice-President, Chief Financial and Administrative Officer
Rhodri J. Harries joined Gildan in August 2015 as its Executive Vice-President, Chief Financial and Administrative Officer. Prior to joining Gildan, Mr. Harries served as the Chief Financial Officer of Rio Tinto Alcan since 2014, where previously he held the position of Chief Commercial Officer from 2009 to 2013. Mr. Harries joined Alcan in Montréal in 2004 as the Vice President and Corporate Treasurer and remained with the company following its acquisition by Rio Tinto in 2007. Prior to joining Alcan, Mr. Harries spent 15 years in North America, Asia and Europe with General Motors, where he held successive positions of increasing responsibility in finance and business development. He is accountable for the Company’s financial management as well as overseeing human resources, corporate development and corporate affairs, information technology, legal affairs and corporate communications.
Fiscal 2019 Highlights
Focused on gross margin and SG&A targets, achieving a 6.7% reduction in SG&A
Announced eighth consecutive annual increase of Gildan’s dividend
Returned approximately $368 million to shareholders through dividends and share repurchases
Fiscal 2019 Direct Compensation
Salary
Short-Term Incentive
Long-Term Incentives
Total Direct Compensation
($)
($)
($)
($)
666,538
99,981
1,249,971
2,016,490
Equity Ownership as at December 29, 2019(1)
Common Shares
RSUs
Minimum Shareholding Requirement
Meets Requirement
(#)
($)
(#)
($)
34,458
1,074,211
162,038
5,051,452
3 x Base Salary
Yes





MANAGEMENT INFORMATION CIRCULAR 38

COMPENSATION DISCUSSION AND ANALYSIS

Michael R. Hoffman
President, Sales, Marketing and Distribution
Michael R. Hoffman joined Gildan in October 1997 and has over 30 years of experience in apparel sales and marketing. Mr. Hoffman served as Vice-President, Sales and Marketing for the international division until his appointment as President of Printwear in February 2001, providing strategic direction and leadership for the Company’s sales and marketing groups in the Printwear division. Effective in 2018, following the combination of the Printwear and Branded Apparel operating segments into a unified consolidated operating structure, Mr. Hoffman was appointed President, Sales, Marketing and Distribution of the combined organization.
Fiscal 2019 Highlights
Focused on net sales growth across Imprintables, Retail Brands and Private Brands
Drove a product-line reduction initiative to simplify the imprintables product portfolio and reduce complexity in manufacturing and warehouse distribution activities
Oversaw strong gains in private brand sales, with double-digit growth in underwear and double-digit growth in global brand sales
Fiscal 2019 Direct Compensation
Salary
Short-Term Incentive
Long-Term Incentives
Total Direct Compensation
($)
($)
($)
($)
620,833
93,125
1,199,982
1,913,940
Equity Ownership as at December 29, 2019(1)
Common Shares
RSUs
Minimum Shareholding Requirement
Meets Requirement
(#)
($)
(#)
($)
46,608
1,452,981
133,432
4,159,675
3 x Base Salary
Yes
Benito A. Masi
President, Manufacturing
Benito A. Masi has been involved in apparel manufacturing in North America for over 30 years. He joined Gildan in 1986 and since then has held successive positions of increasing responsibility in textile, apparel and hosiery manufacturing. In January 2005, Mr. Masi was promoted to the position of Executive Vice-President, Manufacturing (recently changed to President, Manufacturing), and has overall responsibility for the strategic and operational performance of the Company’s worldwide manufacturing facilities and supply chain.
Fiscal 2019 Highlights
Executed on key optimization and capacity expansion projects, including consolidating textile, hosiery and sock operations
Completed the ramp up of production at Gildan’s newest textile facility, Rio Nance 6
Initiated development of a major multi-plant manufacturing complex in Bangladesh including acquisition of land for construction
Fiscal 2019 Direct Compensation
Salary
Short-Term Incentive
Long-Term Incentives
Total Direct Compensation
($)
($)
($)
($)
595,833
89,375
1,149,993
1,835,201
Equity Ownership as at December 29, 2019(1)
Common Shares
RSUs
Minimum Shareholding Requirement
Meets Requirement
(#)
($)
(#)
($)
172,448
5,375,979
91,043
2,838,219
3 x Base Salary
Yes



MANAGEMENT INFORMATION CIRCULAR 39

COMPENSATION DISCUSSION AND ANALYSIS

Chuck J. Ward
Senior Vice-President, Yarn Spinning
Chuck J. Ward joined Gildan in April 2011 as part of the acquisition of GoldToe Moretz Holdings Corp., where he served as the Executive Vice President and Chief Financial Officer. Upon joining Gildan, Mr. Ward served as Vice President, Integration leading the integration of GoldToe Moretz Holdings Corp. into Gildan. In 2012, Mr. Ward was appointed to the position of Senior Vice-President, Yarn Spinning and has been responsible for leading the strategic development and operations of Gildan’s yarn spinning facilities. He serves as an active member of the Cotton Board, the oversight and administrative arm of the Cotton Research & Promotion Program, representing U.S. upland cotton.
Fiscal 2019 Highlights
Oversight of Gildan’s state-of-the-art yarn-spinning capacity in the United States
Expanded operations with the acquisition of the Eden yarn facility
Supported Gildan’s further penetration within imprintables fashion basics with cost-effective ring spun yarn supply
Fiscal 2019 Direct Compensation
Salary
Short-Term Incentive
Long-Term Incentives
Total Direct Compensation
($)
($)
($)
($)
370,769
51,908
174,980
597,657
Equity Ownership as at December 29, 2019(1)
Common Shares
RSUs
Minimum Shareholding Requirement
Meets Requirement
(#)
($)
(#)
($)
28,544
889,845
14,138
440,745
1.5 x Base Salary
Yes
(1)
For the detailed calculation of the dollar value of Common Shares and RSUs, please refer to the section entitled “Share Ownership Levels” in this Circular.
(2)
Includes 2,970,000 Common Shares which are owned by an entity controlled by Mr. Chamandy.
 
 
 
 
 
Our Executive Compensation Program
Executive Compensation Components
Gildan’s executive compensation program is comprised of fixed and variable components. The variable components include equity and non-equity incentive plans. Each compensation component has a different function, but all elements are designed to work in concert to maximize Company and individual performance by providing financial incentives to executive officers based on the level of achievement of specific operational and financial objectives.
The following table summarizes the compensation components of Gildan’s executive compensation program for fiscal 2019, including the objectives of each component and the criteria impacting each component’s value:
Component
Key Feature
Form
Criteria
Risk-Mitigating Elements
Objectives
Base Salary
Fixed pay rate
Individual salary recommendations based on competitive assessment and economic outlook, leadership and retention
Performance period: 1 year
Cash
Proxy Reference Group data
External benchmarking
Individual contribution and performance
Use of external advisor and peer group analysis
Attract and retain top talent
Recognize level of responsibilities, individual experience and contribution to the Company’s performance
Short-Term Incentive (SCORES)
Annual award mainly based on achievement of pre-determined corporate performance objectives
Individual strategic objectives
Performance period: 1 year
Cash
Revenue
Adjusted diluted EPS performance
Attainment of individual strategic objectives
Capped to two-times target
Use of external advisor and peer group analysis
Subject to the clawback policy
Motivate executives to attain and exceed the Company’s annual goals and financial targets
Long-Term Incentives
3-year vesting period for annual awards
Cliff vests
PSUs vest upon meeting performance criteria
PSUs
Time-based RSUs
Performance based on average RONA improvement, and Revenue and Adjusted diluted EPS growth
Targets in line with the strategic plan
Share price
Multiple metrics
Use of external advisor and peer group analysis
Subject to the clawback policy
Motivate executives to create value for the Company at a level that exceeds targets


MANAGEMENT INFORMATION CIRCULAR 40

COMPENSATION DISCUSSION AND ANALYSIS

Component
Key Feature
Form
Criteria
Risk-Mitigating Elements
Objectives
Retirement Benefits
Defined contribution plans (RRSP/DPSP in Canada, 401(k) in the US)
Cash payments following retirement
Market data used to determine executive contributions to retirement programs
All plans are defined contribution based
Facilitate accumulation of retirement assets
Support retention by ensuring competitiveness
SERP (Supplemental Executive Retirement Plan)
Executive Benefits and Perquisites
Healthcare, disability and life insurance benefits
Annual perquisite allowance or specific allowance, as applicable
Group or individual coverage
Annual allowance
Market data used to determine executive coverage and aggregate value of perquisites
Perquisite value limited by annual allowance
Ensure proper protection
Support retention by ensuring competitiveness
 
 
 
 
 
Base Salary
Salaries of the executive officers are established based on a comparison with competitive benchmarks. The starting point to determine executive officer base salaries is the median of salaries in the Proxy Reference Group or applicable benchmark.
The Compensation and Human Resources Committee regularly reviews the individual salaries of the executive officers and makes adjustments when required to ensure that compensation remains market competitive and reflects individual performance, competencies, responsibilities and experience. The Committee also takes into account the executive officer’s value to the Company and retention risk. From time to time, the Committee engages its compensation consultant to conduct a compensation review of the base salaries of executive officers.
In early fiscal 2019, the Committee engaged WTW to compare the base salaries of the President and Chief Executive Officer, the Executive Vice-President and Chief Financial and Administrative Officer, the President, Sales, Marketing and Distribution, and the President, Manufacturing to those of the Proxy Reference Group and to compare the base salary of the Senior Vice-President, Yarn Spinning to both the Proxy Reference Group and the periodical vice-president level benchmarking. Based on the results of this benchmarking, the base salaries of each of the NEOs, effective March 1, 2019, were as follows:
Name
Base Salary
Glenn J. Chamandy
$1,200,000
 
Rhodri J. Harries
$675,000
 
Michael R. Hoffman
$625,000
 
Benito A. Masi
$600,000
 
Chuck J. Ward
$375,000
 
There was no change to Glenn J. Chamandy’s base salary in 2019. His last salary adjustment was effective as of July 1, 2017.
 
For 2020, as part of the Company-wide annual salary review process and in consideration of the NEOs’ market positioning, the base salaries of each of the NEOs, effective March 1, 2020 is as follows:
Name
Base Salary
Glenn J. Chamandy
$1,200,000
 
Rhodri J. Harries
$695,250
 
Michael R. Hoffman
$643,750
 
Benito A. Masi
$618,000
 
Chuck J. Ward
$386,250
 
For fiscal 2020, the Committee decided not to adjust Glenn J. Chamandy’s base salary, electing instead to increase his annual LTIP target from 450% to 475% of his base salary to further align his long-term interests with those of shareholders. See the section entitled “Determination of Grants”.
 
 
 
 
 
Short-Term Incentive (SCORES)
The Company’s short-term incentive plan, Supplemental Cash Opportunities for Results Exceeding Standards (“SCORES”), aims to enhance the link between pay and performance by:
Aligning the financial interests and motivations of Gildan’s executive officers and employees with the annual financial performance and returns of the Company;
Motivating executive officers and employees to work towards common annual performance objectives;
Providing total cash compensation that is greater than the median of the Proxy Reference Group in cases where superior financial performance and returns in excess of target objectives are attained; and
Providing total cash compensation that is below the market median in cases where corporate performance objectives are not attained.


MANAGEMENT INFORMATION CIRCULAR 41

COMPENSATION DISCUSSION AND ANALYSIS

SCORES target payout levels for each NEO depend on the executive officer’s position.
Name
Target Payout as a Percentage of Salary
Payout Range as a Percentage of Salary (Up to Two Times Target)
  Glenn J. Chamandy
150%
0-300%
  Rhodri J. Harries
75%
0-150%
  Michael R. Hoffman
75%
0-150%
  Benito A. Masi
75%
0-150%
  Chuck J. Ward
40%
0-80%
Performance Measures and Targets
Performance measures, targets and payout levels for SCORES are reviewed and approved annually by the Board of Directors on the recommendation of the Compensation and Human Resources Committee. As stated in the section of this Circular entitled “Risk Assessment of Executive Compensation Program”, as a risk mitigation measure, the Board of Directors retains the discretion to reduce or increase the SCORES payouts, taking into consideration qualitative factors beyond the quantitative financial metrics.
For the President and Chief Executive Officer, the Executive Vice-President and Chief Financial and Administrative Officer, the President, Sales, Marketing and Distribution and the President, Manufacturing, 80% of their short-term incentive is tied to financial measures and 20% is tied to the achievement of pre-defined annual strategic and operational objectives, including succession planning objectives. When the financial measures achieve results in excess of 100%, this serves as a multiplying factor to the annual strategic objectives, thus allowing for the potential maximum payout. For the Senior Vice-President, Yarn Spinning, 65% of his short-term incentive is tied to financial measures and 35% is tied to annual individual objectives.
For fiscal 2019, the Board of Directors approved the following as the financial measures to be achieved for SCORES:
Revenue (“Revenue”) measured against the Company’s budgeted revenue; and
Adjusted diluted earnings per share (“adjusted EPS”) measured against the Company’s budgeted adjusted EPS.
The Compensation and Human Resources Committee recommended the replacement of the RONA metric by Revenue to put more emphasis on top-line growth and maintained adjusted EPS as the financial measures to be achieved in fiscal 2019 to ensure that executive officers’ incentive-based compensation reflects:
Success in achieving the Company’s targets for profitability; and
 
Effectiveness in aligning the financial measures with annual business drivers.
For both financial measures, there is a maximum value over which performance will not add any more to the SCORES payout and a threshold value under which there will be no bonus payout for the NEOs. The maximum and threshold values are at a positive or negative variance of 2% versus the target for Revenue and 3% for adjusted EPS. Between the threshold and target value and between the target and the maximum the progression remains linear. The following table illustrates the SCORES financial measures for fiscal 2019:
Financial Measure
Weighting
Threshold
Target
Maximum
Revenue(1)
50%
T -2%
Target (T)
T +2%
Adjusted EPS(2)
50%
T -3%
Target (T)
T +3%
Payouts Levels
40%
100%
200%
(1)
Revenue is defined as net sales.
(2)
Adjusted EPS is calculated as Adjusted Net Earnings (as defined below), divided by the diluted weighted average number of Common Shares outstanding. Adjusted Net Earnings are calculated as net earnings before restructuring and acquisition-related costs, income taxes relating to restructuring and acquisition-related actions, income taxes related to the re-assessment of the probability of realization of previously recognized or de-recognized deferred income tax assets, and income taxes relating to the revaluation of deferred income tax assets and liabilities as a result of statutory income tax rate changes in the countries in which we operate (“Adjusted Net Earnings”). Adjusted Net Earnings also excludes the impact of the Company’s decision in the fourth quarter of fiscal 2019 to implement a strategic initiative to significantly reduce its imprintable product line stock-keeping unit (SKU) count, by exiting all ship to-the-piece activities and discontinuing overlapping and less productive styles and SKUs between brands. This initiative is aimed at simplifying the Company's product portfolio and reducing complexity in its manufacturing and warehouse distribution activities. The impact of this strategic initiative includes inventory write-downs and a sales return allowance for anticipated product returns related to discontinued SKUs.
In February 2020, upon the recommendation of the Compensation and Human Resources Committee, the Board approved the following changes to the SCORES financial measures:
The maximum and threshold values are at a positive or negative variance of 1.75% versus the target for Revenue and 2.5% for adjusted EPS.
Accordingly, the following table illustrates the SCORES financial measures for fiscal 2020:
Financial Measure
Weighting
Threshold
Target
Maximum
Revenue
50%
T -1.75%
Target (T)
T +1.75%
Adjusted EPS
50%
T -2.5%
Target (T)
T +2.5%
Payouts Levels
40%
100%
200%


MANAGEMENT INFORMATION CIRCULAR 42

COMPENSATION DISCUSSION AND ANALYSIS

Long-Term Incentives
The purpose of the equity incentive component of Gildan’s executive compensation program, namely the LTIP, is to encourage executive officers and key employees of Gildan and its subsidiaries to work toward and participate in the growth and development of the Company and to assist the Company in attracting, retaining and motivating its officers and key employees. The LTIP is designed to:
Recognize and reward the impact of longer-term strategic actions undertaken by executive officers and key employees;
Align the interests of the Company’s executive officers and key employees with its shareholders;
Focus executive officers and key employees on developing and successfully implementing the continuing growth strategy of the Company;
Foster the retention of executive officers and key management personnel; and
Attract talented individuals to the Company.
Types of Equity Incentives Awarded
The LTIP allows the Board of Directors to grant to executive officers the following types of long-term incentives:
Stock options (“Options”);
Dilutive restricted share units (share units that are settled in Common Shares issued from treasury) (“Treasury RSUs”); and
Non-dilutive restricted share units (share units that are settled in cash or Common Shares purchased on the open market, which may vest based on time or performance) (“Non-Treasury RSUs”). The Non-Treasury RSUs awarded to executive officers which vest solely upon meeting performance conditions are referred to in this Circular as PSUs. The Non-Treasury RSUs which vest solely on the basis of time are referred to in this Circular as time-based RSUs.
Treasury RSUs and Non-Treasury RSUs are referred to in this Circular collectively as “RSUs” and individually as an “RSU”.
For a more detailed description of the features of the LTIP, see Schedule “B” of this Circular.
The LTIP awards help to achieve Gildan’s compensation objectives as follows:
The LTIP, through the use of performance vesting, aims at bringing the total compensation received by Gildan’s executive officers to the 75th percentile of the Proxy Reference Group if the Company achieves its maximum performance goals.
 
When applicable, through the use of time vesting for a portion of long-term compensation, the LTIP awards help to achieve the Company’s objective of retaining executive officers.
Effective 2018, to better align our LTIP with the Company’s pay-for-performance philosophy and long-term shareholder value creation, the Compensation and Human Resources Committee recommended to the Board to change the LTIP award mix for Messrs. Chamandy, Harries, Hoffman and Masi from a combination of Options and PSUs to 100% PSUs. The absence of time-based vesting for the President and Chief Executive Officer, Executive Vice-President and Chief Financial and Administrative Officer, President, Sales, Marketing and Distribution and President, Manufacturing reinforces the objective of aligning their interests with those of the Company’s shareholders by ensuring that vesting of PSUs is entirely based on meeting the Company’s strategic objectives. In the case of Mr. Ward, until fiscal 2017, his annual LTIP grants were comprised of three-year Non-Treasury RSUs, 50% of which vested on the basis of time and 50% of which vested upon meeting performance conditions. As of fiscal 2017, the annual LTIP mix for Mr. Ward is 50% PSUs and 50% time-based RSUs.
Determination of Grants
All grants of RSUs and Options (if any) are approved by the Board of Directors, based on the recommendation of the Compensation and Human Resources Committee after considering the recommendation of the President and Chief Executive Officer, with the exception that any grant awarded to the President and Chief Executive Officer is determined and approved independently and without any input from him.
Treasury RSUs are generally used for one-time awards to attract talented candidates or for retention purposes. PSUs, or a combination of PSUs and time-based RSUs, as applicable, are granted to executive officers on an annual basis as part of the long-term portion of their annual compensation. Annual award targets are based on the expected impact of the role of the executive officer on the Company’s performance and strategic development as well as market benchmarking. Previous grants are not taken into account when considering new annual grants, as annual grants are determined by specific guidelines, such as a determined grant value.
With their compensation being set in U.S. dollars, the awards for NEOs are also denominated using the U.S. dollar closing price of the Common Shares on the NYSE.


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COMPENSATION DISCUSSION AND ANALYSIS

In 2019, target annual equity awards to executive officers, as a percentage of base salary, are as follows:
Name
Fiscal 2019
Target Awards
(% of Base
Salary)
Mix of PSUs and Time-Based RSUs (% of Base Salary)(1)
PSUs
 Time-Based RSUs
Glenn J. Chamandy
450%
450%
—%
Rhodri J. Harries
200%
200%
—%
Michael R. Hoffman
200%
200%
—%
Benito A. Masi
200%
200%
—%
Chuck J. Ward
50%
25%
25%
(1)
PSUs have the potential to vest at a maximum of 200% of the actual number of PSUs held at the vesting date.
Between fiscal 2015, when the Company changed its year end, until fiscal 2018, the timing of the annual equity grants coincided with the release of the financial results for the third fiscal quarter. Since fiscal 2018, annual LTIP grants are awarded in February of each year following the fourth quarter Board meeting in order to align with management’s long-range plan and budgeting processes.
For purposes of determining the annual grants, the Company uses the closing price of the Common Shares on the trading day following the day of the release of the Company’s financial results. The timing of the annual grants ensures the grants occur on a date outside of the quarterly trading blackout periods under the Company’s Insider Trading Policy.
For fiscal 2020, the Committee engaged WTW to review the positioning of the total direct compensation of the NEOs compared to the Proxy Reference Group in the case of Messrs. Chamandy, Harries, Hoffman and Masi, and to review the results of both the Proxy Reference Group and the benchmarking of vice-president levels for Mr. Ward. Based on the results of this review, the annual LTIP target awards for Messrs. Harries, Hoffman, Masi and Ward remained the same. In the case of Mr. Chamandy, in lieu of an increase in base salary, the Committee decided to increase his annual LTIP target award from 450% to 475% of his base salary to further align his long-term interests with those of shareholders. See the section entitled “Base Salary”.
Performance Measures and Weightings
To encourage a long-term view of performance and to align the interests of executive officers with the interests of shareholders, Options, PSUs and time-based RSUs have vesting conditions that are based on the following criteria:
Award Type
Time
Gildan’s Financial Performance
Options
100%
PSUs(1)
100%
Time-Based RSUs
100%
(1)
PSUs have the potential to vest at a maximum of 200% of the actual number of PSUs held at the vesting date, if Gildan’s financial performance exceeds the target performance by a certain percentage.
 
Vesting for Options: Options granted to executive officers prior to fiscal 2018 have a term of seven years and are not exercisable prior to the second anniversary of the grant date, with 25% being exercisable on and after each of the second, third, fourth and fifth anniversary of the grant date with the exception of a special one-time grant of Options to the Executive Vice President, Chief Financial and Administrative Officer in August 2015, which cliff-vests at the end of the five year period. Effective fiscal 2018, the Company no longer awards Options as a part of the annual grants under the LTIP.
Vesting for PSUs: PSUs awarded to executive officers cliff-vest at the end of a three-year period.
PSUs awarded in fiscal 2019 vest fully based on the attainment of the following three strategic performance objectives, which are set based on the Company’s long-term strategic plan:
Revenue: The Company’s annual revenue growth (3-year compounded annual growth rate);
Adjusted EPS: The Company’s annual adjusted earnings per share growth (3-year compounded annual growth rate);
RONA: The Company’s average return on net assets improvement (3-year average).
Effective for the PSUs awarded in February 2019, and in consideration of the changes to the short-term incentive financial measures described in the section entitled “Short-Term Incentive (SCORES) - Performance Measures and Targets”, the weighting of the RONA metric is now 50% and the weighting for adjusted EPS and Revenue is 25%, respectively. Furthermore, the threshold payout value is set to 40%, to align with the threshold payouts under the short-term incentive plan.
The measurement period begins on the first day of the fiscal period in which the award is granted.
In addition, PSUs can vest at up to two times the actual number of PSUs held at the vesting date, based on the achievement of exceptional performance for the period. This feature aligns the Company’s pay practices with its compensation policy, which is to provide the potential for top quartile total compensation when Company performance is also top quartile.
PSUs awarded in fiscal 2019 will vest as follows:
Financial Measure
Weighting
Threshold Payout
Target Payout
Maximum Payout
Revenue(1)
25%
40%
100%
200%
Adjusted EPS(2)
25%
40%
100%
200%
RONA (3)
50%
40%
100%
200%
(1)
Revenue is defined as net sales.
(2)
Adjusted EPS is calculated as Adjusted Net Earnings, divided by the diluted weighted average number of Common Shares outstanding.


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COMPENSATION DISCUSSION AND ANALYSIS

(3)
RONA is defined as the ratio of Adjusted Net Earnings, excluding net financial expenses and the amortization of intangible assets (excluding software) net of income tax recoveries related thereto, to average net assets for the last five quarters. Net assets are defined as the sum of total assets, excluding cash and cash equivalents, net deferred income taxes, and the accumulated amortization of intangible assets (excluding software), less total current liabilities excluding the current portion of lease obligations.
There is no change to the metrics and weightings for the PSUs awarded to the NEOs in February 2020.
The metrics for the PSUs awarded in fiscal 2018 each had a weighting of 1/3 and will vest as follows:
Financial Measure
Weighting
Threshold Payout
Target Payout
Maximum Payout
Revenue
33.3%
50%
100%
200%
Adjusted EPS
33.3%
50%
100%
200%
RONA
33.3%
50%
100%
200%
PSUs awarded prior to fiscal 2018 vest fully based on the Company’s average return on assets performance for the period as compared to the companies in the S&P/TSX Capped Consumer Discretionary Index, excluding income trusts, at the time of grant, and are subject to the following relative performance-vesting schedule, with linear interpolation between the 40th percentile and the median and between the median and the 75th percentile:
Financial Performance Relative to the S&P/TSX Capped Consumer Discretionary Index
Percentage of Award That Vests
Equal to or above the 90th percentile
200%
Equal to the 89th percentile
180%
Equal to the 88th percentile
160%
Equal to the 87th percentile
140%
Equal to the 86th percentile
120%
Equal to or above the 75th percentile and below the 86th percentile
100%
At the median
50%
Below the 40th percentile
0%
During fiscal 2019, the PSUs held by Messrs. Chamandy, Harries, Hoffman and Masi vested as follows:
Grant Date
Vesting Date
Financial Performance Relative to the S&P/TSX Capped Consumer Discretionary Index
Percentage of Award that Vested
November 7, 2016
November 6, 2019
89th percentile
180%
Non-Treasury RSUs awarded to Mr. Ward prior to fiscal 2017 are subject to the following relative performance vesting schedule, with linear interpolation between the 40th percentile and the median and between the median and the 75th percentile:
 
Financial Performance Relative to the S&P/TSX Capped Consumer Discretionary Index
Percentage of Award That Vests
Equal to or above the 75th percentile
100%
At the median
50%
Below the 40th percentile
0%
During fiscal 2019, the performance component of Mr. Ward’s 2016 award vested at 100%.
Dividends on Outstanding Restricted Share Units
In conjunction with the declaration of its quarterly cash dividend on the Common Shares, the Board also credits the holders of Treasury RSUs, Non-Treasury RSUs and PSUs with additional RSUs based on the amount of the dividend such holders would have received had their RSUs been Common Shares on the payment date of the dividend. Accordingly, effective on the payment date of each of the Company’s quarterly cash dividends of $0.134 per share during fiscal 2019, namely April 1, June 10, September 9, and December 9, 2019, the Board granted additional RSUs to each RSU holder with the same performance objectives and other terms and conditions as the underlying RSUs. For the purpose of this Circular, these additional RSU grants are referred to as “RSU Dividends”.
The number of RSU Dividends granted to each holder is calculated based on the value of the cash dividend the RSU holder would have received had their RSUs been Common Shares on the payment date of the dividend, divided by the higher of the closing price of the Common Shares on either the TSX or the NYSE expressed in a single currency, converted into the currency of the underlying grant, based on the exchange rate of the Bank of Canada on the business day preceding the payment date of the dividend.
Retirement Policy for the LTIP
All LTIP participants, including executive officers, are eligible to benefit from extended vesting conditions for their Options and RSUs under Gildan’s Retirement Policy, provided certain “Retirement” or “Early Retirement” criteria are met. LTIP participants are eligible for retirement when they reach the age of 55 years, have at least five years of service, and their age plus their number of years of service equals at least 70.  LTIP participants are eligible for early retirement when they reach the age of 55 years and have at least five years of service. In both cases, LTIP participants must sign a non-compete and non-solicitation agreement with the Company in order to be eligible for the extended vesting conditions.
As further described in Schedule “B” of this Circular, when a participant qualifies for retirement, Options granted at least six months before the date of retirement will continue to vest and will remain exercisable until the original expiry date, and Options granted in the last six months will expire immediately.


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COMPENSATION DISCUSSION AND ANALYSIS

Similarly, RSUs granted at least six months before the date of retirement will continue to vest over their original vesting period, and RSUs granted in the last six months will be prorated and the performance portion of the award will be determined at the end of the original vesting period. When a participant qualifies for early retirement, Options that have vested by the
 
date of early retirement may be exercised until the original expiry date, Options that have not vested will expire immediately, and RSUs will be prorated and the performance portion of the award will be determined at the end of the