FORMER Australian Wool Innovation chairman Wal Merriman will be able to stay on the board indefinitely and possibly renominate for the top role under an industry deal proposed recently.
AWI director and chairman of AWI’s shareholder engagement committee Don Macdonald last week admitted that a 10-year director term cap proposal from the 2018 AWI performance and governance review was directed at Mr Merriman.
Mr Merriman resigned as AWI chairman late last year after 10 years in the role, with his preferred successor Colette Garnsey taking over. Mr Merriman joined the AWI board in 2004 and has been chairman since 2008, but was recently at the centre of several industry controversies concerning his behaviour and AWI governance.
At the Balmoral Sire Evaluation Group’s field day at Coleraine in western Victoria on Friday Mr Macdonald said AWI was proposing to other industry groups – including WoolProducers Australia and the Australian Wool Growers Association — an eight year term cap on the AWI chair position, which would usually involve two four-year terms.
“We believe that addresses the intent of the recommendation whilst protecting the company from a brain drain.
“If a number of directors get to 10 years at the same time, well they all go at once.”
However, Mr Macdonald said details about 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 was now precluded for life from becoming chairman again, have not been finalised.
Garnsey’s tenure extended under industry agreement
Mr Macdonald said AWI had to very careful, “and quite a few industry organisations agreed with this – that we didn’t design a system for the future of the company because of one man.”
“I think we know that a lot of the recommendations that were centred around this were aimed at our former chairman.
“We didn’t agree that we should set up the rules for the future of this company because one chairman stayed there for 12 or 13 years,” he said.
Mr Macdonald said current AWI chair Colette Garnsey has been on the board for seven years.
“If we bought a rule in for 10 years, she has got to go in three years’ time,” he said.
“So nobody agreed with the 10-year tenure rule was the right thing for the company.”
He confirmed after his presentation that there would be no limit on how long a director could hold their position on the AWI board.
AWI and the main wool grower bodies – WPA and AWGA – began negotiating key recommendations of the performance and governance review, and whether they should go to an extraordinary general meeting as shareholder resolutions after the 2018 AWI annual general meeting. These AWI review recommendations covered a 10-year director term cap proposal, declaration of AGM proxies held by the chair, the structure of the board nomination committee and definition of director independence.
WPA and AWGA were concerned that the required 75 percent shareholder approval of the key recommendations might not be achievable at an EGM without AWI board endorsement and the AWI board was resisting the governance changes because they affected the “DNA” of the company.
Mr Macdonald told the Coleraine field day crowd that the six or seven unresolved review issues “went to the core of the DNA of the company – how shareholders elect their representatives.”
He said the AWI board was also keen to retain AWI’s “democratic” board election model.
“We went through these issues one by one and pretty well got agreement that we could address the intent of the recommendations, but keep our democratic model.
“So we felt that this was a better path to take and come up with something that protected shareholders’ rights, satisfied those who wanted change – we’ve agreed to some change, we’ve met halfway in some things which were things that review of performance identified, but we’ve kept on to the democratic model that the shareholders will still have the last say on who represents them on the board of AWI,” he said.
“We can’t rule out an EGM at all at this stage because we haven’t quite finished the process, but we are well down that track and we will know in the next few weeks if we’ve got everybody’s agreement with it.
“We’ve notified the Minister (for Agriculture David Littleproud), we just have to set a date to go to see him and make sure he is 100 percent on side, because we’ve got the grower representative groups on side with us.”
AWI 100 signature nomination rule to stay
Mr Macdonald said it was proposed that rule allowing a shareholder with 100 supporting registered shareholder signatures to stand for the board without the recommendation of the AWI board nomination committee would be retained.
He said to address the intent of the review’s BNC structure recommendation, AWI is introducing a model where an overhauled five-member BNC would be “very independent of the influence of the board“, but would have two AWI directors, neither of which will be the chairman.
“There will be a two-tiered system or a two-lane system where if the board or someone sees that there is a particular skill that is needed in an area where these people are not known with growers — because we do have to remember that it can be a popularity contest and that’s not necessarily the best way; to fill boards with all the popular people.
“They can get one signature, one shareholder to endorse them and they can front the board nomination committee,” he said.
“But if the BNC doesn’t endorse you, that’s as far as you go.”
“The board nomination committee then has to endorse them as one of the favoured candidates and the other people, people like me, go and get the 100 signatures, and we can stand whether we are endorsed by the BNC or not,” he said.
“The people who have been headhunted for particular skills have to be endorsed by the BNC and they can go through and stand for election – they still have to get voted in by the shareholders.”
Mr Macdonald later told Sheep Central that the amount of proxies held by the chair at an AGM would be announced at the meeting and shareholders will be advised in the notice of meeting how those proxies will be directed.
He said an extra director was proposed for the AWI review’s recommended BNC structure because the best people to advise on any board skills gap would be the current directors.
Mr Macdonald said the AWI board also did not agree that the chair must necessarily direct proxies according to the BNC’s recommendations.
Mr Macdonald said an EGM would definitely not be held in March this year, but this hinged on the outcome of meeting with Ms Garnsey with the Minister for Agriculture David Littleproud.
“I think everyone is on the same page, in fact all the groups that we’ve spoken to.
“Even the groups who went to the original meeting of the ICC with a pre-conceived position that we didn’t want to do any bargaining, they see all the logic of not having an EGM, let’s get this over with.”
Sheep Central was unable to get a response from WoolProducers Australia on the AWI proposals under negotiation.