AUSTRALIAN Wool Innovation is seeking to delay implementation of key recommendations from its latest governance and performance review until next year.
AWI chairman Wal Merriman has written to wool industry bodies stating that the “vast majority” of the 82 recommendations for the independent review have been accepted by the AWI board “and implementation on many has already commenced.”
However, in the email letter he has said AWI board members have concerns about “the confusion that will be caused with the AGM and WoolPoll simultaneously being debated, WoolPoll – 2/11/18 and the AGM – 23/11/18.”
“Our first priority is to fund the company and after receiving media advice the board are keen to get clear air for WoolPoll and then present the constitutional issues/recommendations to shareholders at an EGM in the new year which will allow the matter to be dealt with and provide clarity in ample time for the director election – AGM in November 2019.
“There are a handful of recommendations (9) that Herbert Smith Freehills our Corporate Lawyers believe affect these things,” Mr Merriman said in the email letter.
“While the board has been elected to make strategic decisions, we strongly believe the impact of some these changes should be put to shareholders, as the power to direct the company lies in their hands.
“This has always been a fundamental principle within the industry and one the board respects and is committed to uphold,” Mr Merriman said.
“As such, we are planning to put the outstanding recommendations to an Extraordinary General Meeting (EGM) early next year.
“The rationale behind convening an EGM is to allow sufficient time to communicate and inform shareholders of these recommendations, providing sufficient time for consultation and discussion.”
Sheep Central believes Mr Merriman’s email letter was sent after AWI met with the Department of Agriculture and Water Resources last week to discuss its lack of an implementation. Sheep Central has confirmed the letter was sent to Wool Producers Australia, the Australian Superfine Wool Growers Association, the Australian Wool Growers Association, and AWI Industry Consultative Committee broad wool sector representative Nick Cole.
Mr Merriman wrote that before any decision is finalised, the board would like to seek the organisations’ positions by 29 August, “one way or the other, regarding our intention to convene an EGM early in 2019.”
Mr Merriman told Sheep Central he had no comment about the letter, but he added it was “just nonsense” to suggest the EGM proposal was an attempt to delay the implementation of some of the review’s recommendations.
“I’ve been asked to do this by the Minister, so thank you,” he said.
EGM proposal is a delaying tactic — AWGA
However, AWGA director Martin Oppenheimer said he believed the EGM proposal was a delaying tactic by the AWI board.
“It’s not satisfactory, we have to move on.
“This is just people clinging on and creating uncertainty,” he said.
“This board has got to put the industry first and adopt these recommendations into the board charter so the industry can move on and prosper.”
A ‘real chance’ of government intervention
Mr Oppenheimer believes there is a “very real chance” that the Federal Government would intervene if the AWI board did not implement all 82 of the review recommendations at its next board meeting.
“That’s what we want to avoid – that would erode confidence in the wool industry.
“As far as we are aware, the government is committed to these changes,” he said.
“These are changes backed by the industry – the major grower groups have supported these changes.”
When the AWI Review’s report was released in July this year, Mr Littleproud said reviewer Ernst Young (EY) called for AWI to “immediately implement the review with vigour and in a consultative manner, and I support this.”
“I expect recommendations requiring constitutional change to be ready for this year’s AGM in November.
“I also call on stakeholders to work constructively with AWI to implement the review,” Mr Littleproud said.
Mr Oppenheimer said the AWI board particularly needs to adopt the review recommendations relating to the 10-year director term cap and the changes to the board nomination committee. If implemented, these recommendations could end the board tenure of Mr Merriman and limit his ongoing influence on the current board nomination process.
“As far as we are aware, there is no requirement to go to an EGM – under the board charter they can make the necessary changes,” Mr Oppenheimer said.
He believed the AWI board can make the recommended director term cap and BNC changes that have been supported by grower bodies without a shareholder vote.
Mr Oppenheimer said the review recommendations need to be implemented by the AWI board at its next meeting to ensure the director term and BNC changes were not “hanging over” the WoolPoll 2018 vote.
“Then growers will have the ‘clear air’ that is being talked about.
“They should have already done it, but at the next board meeting they should adopt all recommendations and they should make that statement and adjust the board charter.
“Then we can get on with the WoolPoll and the running of the company going forward,” he said.
“What we really need to avoid is the government having to involve legislation and coming in with a heavy hand.”
Mr Oppenheimer said the EGM would involve more cost to growers and lead to more doubt lingering over the WoolPoll, the 2018 AGM and the running of the company.
Click here to read Mr Merriman’s letter.
Good to see AWI allowing producers to exercise their rights and not pandering to “squeaky wheels”.
It’s time for wholesale change. Sadly, EY has not gone nearly hard enough in their recommendations on AWI. They are a law completely unto themselves with no accountability to the piper.
Very sad days when contrary to industry and government expectations, the AWI board is refusing to adopt simple board charter changes, confusing these issues by seeking expensive legal options and once more wasting levies on silly ways to remain in office. How sad that legislation looks like the only option for the Feder Government.
AWI and the Australian government have a lot in common. The powers to be are really only interested in their own position, using the premise of concern about the people they are representing. We may be sheep producers; however, we are more than able to comprehend and consider two issues at once. To procrastinate about the inevitable is just another example of AWI not being prepared to take issues head-on when it may affect their own hip pocket.
This is clearly yet another delaying tactic to protect board privilege. The requisite changes can be implemented as matters stand. To string this out could mean that overdue changes could still be in the air by the time the 2019 elections come around.
I think there are some thee board members who will have reached the projected 10-year limit by then, which would otherwise come into effect.
There has hardly been a review period over the past ten years when serious governance issues have not been raised. Wool growers have rightly formed the view that the AWI is a virtual closed shop at board level. It is time the board door was opened and some fresh air let in.