Agriculture Minister David Littleproud

AUSTRALIAN Wool Innovation has again been put on notice by Agriculture Minister David Littleproud over its failure to fully implement all recommendations from a performance and governance review earlier this year.

AWI last Friday submitted its implementation plan for the review’s 82 recommendations, which included the deferral of five issues for shareholder consideration at an extraordinary general meeting next year.

However, Mr Littleproud said yesterday the plan was “short on detail and vague” and it was not clear if AWI will implement, or agrees with, all of the review’s recommendations.

At the Rural Press Club of Queensland last month Mr Littleproud said “it’s time for personalities leave (AWI)” and did not rule out winding AWI up. The minister has also said he preferred AWI to show leadership on the recommendations “rather than forcing me to legislate.”

AWI chief executive officer Stuart McCullough and chairman Wal Merriman told a Senate Estimates hearing yesterday that there were five review recommendation listed for shareholder consideration, and another two were agreed to in-principle by the board.

The minister has given AWI until Monday October 29 to explain in writing its position and make it clear to wool growers “that AWI’s position is to support the implementation of all of EY’s 82 recommendations.” This is to be published on AWI’s Review of Performance information portal, Mr Littleproud has requested.

The minister has also said his opposition counterpart Shadow Agriculture Minister Joel Fitzgibbon agrees with his approach for all recommendations to be implemented.

“I have always been clear I expect AWI to lead and implement all 82 recommendations from the AWI report,” Minister Littleproud said in his statement yesterday.

“Last Friday I received AWI’s implementation plan.

“The plan is short on detail and vague about how or if it would implement all recommendations. I’m disappointed with that,” he said.

“EY made 82 recommendations and I expect AWI to implement every one of them. AWI needs to be transparent with its shareholders, the public and the government about its plans.

“Wool growers and the taxpayers – who provide AWI with the majority of its income – expect this,” Mr Littleproud said.

AWI bucks EY recommendations in review

The AWI board wants recommendations relating to implementing a 10-year director cap, a new independent director definition, a revised director candidate nomination process and improving election proxy transparency to go to shareholders. They encompass review recommendations 1.10.4, 1.11.3, 1.9.1, 1.9.10 and 1.12.1. The AWI leaders also told the senators the AWI board only agreed in principle to two BNC structure and process recommendations — 1.12.4 and 1.12.3.

However, Mr Littleproud has noted AWI intended to put to shareholders several review recommendations that EY did not intend for shareholder consideration. These include:

– enhancing the definition of director independence in the board charter (1.9.10)

– requiring board members to direct open proxies in accordance with Board Nomination Committee (BNC) recommendations in at director elections (1.12.1)

– restriction on board members campaigning for director nominees and former members of the BNC nominating as directors for at least three years (1.12.4)

Recommendations 1.12.1 and 1.12.4 also include that updates to the rules and procedures governing the election of directors  and the BNC charter should reflect these changes.

Mr Littleproud has said the recommendations which Ernst&Young says should be implemented, should be implemented by the AWI board, and not “passed off” to a shareholder vote.

“Those which EY says should go to a shareholder vote should go to a shareholder vote.”

“AWI needs to express support for recommendations which require shareholder endorsement and prove to wool growers they are serious about change, including cultural change,” Mr Littleproud said.

“I expect AWI to provide early and regular assurance to wool growers about its implementation of the review’s recommendations.”

Mr Littleproud’s release said the government will continue to monitor progress and that EY recommended a checkpoint review in 12 months. The review into AWI’s performance and governance can be found at: http://www.agriculture.gov.au/ag-farm-food/innovation/awi-performance-review