Agribusiness

AWI and WoolProducers disagree over chair and director tenure proposals

Terry Sim, March 1, 2019

AWI director Don Macdonald’s assertion of agreement with WPA on director tenure has been rejected.

DISAGREEMENT over director and chair tenure is stopping Australian Wool Innovation and industry bodies from agreeing on the implementation of key recommendations from the AWI review of performance and governance.

WoolProducers Australia has rejected AWI director Don Macdonald’s suggestion last week that AWI and the peak grower body had agreed on a proposal for an eight year cap on AWI chair terms.

The Ernst-Young review of AWI performance and governance last year proposed a 10-year director term cap as a key proposal among 82 recommendations to improve the performance and governance at the wool levy funded research, development and marketing body.

Several key recommendations were slated to be put as resolutions for consideration by AWI shareholders at an extraordinary general meeting proposed for March 15. However, recent industry negotiations designed to avoid an EGM — for fear the 75 percent vote needed for resolution approval would not be gained without board endorsement – and the required 21-day meeting notice period, mean an EGM cannot be held on March 15 or mid-March as requested by Minister for Agriculture David Littleproud.

At the Balmoral Sire Evaluation Group’s field day at Coleraine in western Victoria on Friday Mr Macdonald said AWI and other industry groups – including WoolProducers Australia and the Australian Wool Growers Association — had agreed to AWI’s proposal to implement an eight year term cap on the AWI chair position, protecting AWI from “a brain drain”. He confirmed AWI was proposing no limit on director tenure and recognised the original EY review 10-year director tenure cap proposal was aimed at former chairman Wal Merriman, who had held the post since 2008 before resigning last year and has been a director since 2004.

Mr Macdonald said the roll-off period after eight years, whether a former AWI chair could renominate for the role after serving eight years, or whether Mr Merriman would be precluded for life from becoming chairman again, have not been finalised.

AWI and the wool grower bodies have also been negotiating over the AWI review recommendations on the declaration of AGM proxies held by the chair, the structure of the board nomination committee and definition of director independence. In negotiations since the AWI AGM in November last year, WPA initially wanted a six year director tenure cap, which was rejected by AWI. Contrary to Mr Macdonald’s understanding of the negotiations, WoolProducers has claimed it then rejected AWI’s eight year chair tenure cap proposal, which did not include any provision for a director who has served eight years to leave the board.

Nothing official from AWI – Storey

WoolProducers president Ed Storey

WPA president Ed Storey this week said it was WPA’s understanding that agreement has been reached between industry bodies and AWI on the contentious issues of the AWI Review of Performance recommendations.

“However, we have not seen anything official from AWI.

“WPA does not agree with the comments made by Mr Macdonald as reported in the Sheep Central article on Monday, as they do not accurately reflect our understanding of this agreement regarding at least one of the recommendations.”

AWI chair Colette Garnsey

Sheep Central believes if an eight year chair term cap with no director tenure limit was made retrospective and depending on what roll-off period is decided, this might prevent former chairman Wal Merriman from resuming the top position, but give current chair Colette Garnsey another seven years in the role. Again depending on retrospectivity and the roll-off period, an eight year director term cap might end Mr Merriman’s tenure on the board and that of fellow directors David Webster, Meredith Shiells and Ms Garnsey at the next annual general meeting. If the board tenure cap was set at 10 years, Mr Webster and Ms Shiells would have to leave the board at the next AGM and Ms Garnsey would have another three years, which Mr Macdonald last week indicated was also a concern at the company.

Prolonging of director tenure will not happen – AWGA

AWGA director Martin Oppenheimer

AWGA director Martin Oppenheimer also confirmed this week that there had been no formal agreement on implementation of the key review recommendations, especially director or chair tenure.

He said WPA and AWGA had entered into negotiations at Industry Consultative Committee and other meetings, with the intent of not further dividing the industry over the issues after a difficult year.

“However, we have not had any formal communications on the outcomes of meetings or seen the consensus paper – there has been no draft agreement.”

Mr Oppenheimer said it was premature for AWI to go public on the negotiations and suggest an agreed outcome last week.

“We haven’t seen the detail and goodwill is eroding.

“If the objective is to prolong the tenure of some directors – which is clearly not the intent of the EY review – we are not going to let that happen.”

Mr Oppenheimer said the AWI board’s adherence to good governance is being tested.

“This is a wake-up call to get the industry headed in the right direction when there are drought, animal rights and other operational issues to be dealt with.

“These governance issues must be dealt with and put to bed,” he said.

“The intent of the EY review must be respected and acted on.”

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Comments

  1. Andrew Farran, March 2, 2019

    Governance issues at AWI; when was it ever not? Time now to get this sorted once and for all.

  2. Chick Olsson, March 1, 2019

    Excellent leadership shown by Ed Story and Martin Oppenheimer holding AWI to account on these key EY recommendations.
    It’s a terrible look for any chair to retire and then hang around the board like a bad smell. The AWI board badly needs freshness and new blood.

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