AWI chairman Wal Merriman
AUSTRALIA’S peak wool marketing and research body could soon lose its chairman Wal Merriman and two other board members if shareholders implement maximum 10-year director terms recommended by an AWI performance and governance review.
An independent performance and governance review of AWI has made sweeping recommendations to improve the board, election, governance and consultation structures of the body.
A statement from the Minister for Agriculture and Water Resources David Littleproud today said key recommendations include maximum 10-year board terms; moving to a skills-based board; improvements in election and proxy transparency, strategic planning, communication with stakeholders and stakeholder engagement, and; independent investigation of breaches of the code of conduct by board members.
Mr Merriman was elected to the AWI board in 2004 and fellow board members David Webster from Western Australia and Dr Meredith Sheil in New South Wales were elected in 2008.
The tenures of the current directors as at the 2017 annual general meeting were Wal Merriman, 13 years; David Webster, 9 years; Meredith Sheil, 9 years, Colette Garnsey, 6 years; James Morgan, 4 years; Jock Laurie, 2 years; Don Macdonald, new board member.
Mr Littleproud indicated today he expected AWI to implement all of the review’s recommendations.
“I expect AWI to provide early and regular assurance to wool growers about its implementation of the review’s recommendations, and the government will closely monitor progress.”
“I’ll be writing to AWI to make my expectations clear,” he said.
“I expect the AWI board to show strong leadership and work with wool growers to implement change, including cultural change.
“While some recommendations have personal implications for board members, I expect that the AWI board will act in the best interests of the organisation and levy payers, to better position AWI to support the wool industry for the future,” he said.
Sheep Central was unable to contact Mr Merriman before this report was published, but he has previously said he would stay on the board while he had shareholders’ support. Under the current system of director rotation, the AWI leader might not be due for re-election until 2021.
Under AWI’s current constitution, at every annual general meeting held in a rotation year, one-third of the directors (other than a managing director under Rule 14.2), or if the number of directors is not a multiple of three, then the number nearest to but not less than one-third, must retire from office. The directors to retire are the directors or director longest in office since last being elected. The next election rotation year is currently 2019 and any change to AWI’s constitution currently requires a special resolution passed by at least 75 percent of valid votes cast at any general meeting.
AWI review follows wide industry concerns
The review followed a series of Senate Estimates hearings, prompted by industry concerns spanning governance, board director nominations, elections and researching funding. These issues included the conduct of Mr Merriman in covertly observing a sheep breeder focus group behind a mirror and his swearing at an ABC journalist.
The Senate Estimates hearings also focussed on Mr Merriman’s influence on the AWI board nomination committee and in AWI director elections, where he has held sufficiently large numbers of proxies to influence election results.
The review has made 82 recommendations highlighting several breaches of AWI’s statutory funding agreement and governance deficiencies. But the 509-page report also makes direct reference to Mr Merriman’s “substantial influence” over the membership of the AWI board nomination committee.
“The lack of transparency in how proxies are used, particularly for the election of directors, has led to an amount of stakeholder distrust and is not in line with good governance behaviours.
“Whilst it has been procedurally adequate, the use of open proxies should be more transparent in the future,” the report said.
“The current process for member selection of the BNC is inappropriate as the chair of the board has a substantial influence over the membership of the committee, which then reviews potential candidates for director roles.
“Combined with the issues of the use of proxies, this means that stakeholders do not have confidence in the board process and the ability for the board to effectively implement a broader skills based board,” the report said.
The EY report recommends that the BNC should be strengthened and become more independent, making recommendations for a new process that includes updates to Rule 13.3(d) of the Constitution, specific rules on BNC membership, and its role.
AWI oversight body not recommended
Other review recommendations span funds use, strategic plan performance, benefits; engagement, consultation and communication; monitoring end evaluation, RDC collaboration, effectiveness in implementing the 2012-15 review recommendations.
However, the review concluded that ultimate accountability for AWI’s performance and operations should rest in its board of directors, and it did not agree that there should be any “oversight” bodies established that would derogate from the board’s role. However, we believe that AWI needs to substantially improve the depth and quality of its engagement and relationships with industry representative organisations and other stakeholders.
Reviewer EY conducted interviews with 110 stakeholders, received 56 written submissions and conducted a survey of more than 400 wool growers.
Review lead Andrew Metcalfe said the review’s wool grower survey revealed that many stakeholders believe that AWI has performed well in many regards, and believe that it should be recognised for its marketing, research and development initiatives.
“However, many also believe that there are a number of areas where performance must be improved, to better address the risks and embrace the opportunities that the future holds.”
WoolProducers’ concerns vindicated
Peak grower body WoolProducers Australia said its initial consideration of the report’s recommendations, indicate that if implemented, they will enhance transparency, accountability and consultation to the compulsory shareholders of AWI.
The identification of greater transparency, accountability, consultation and the need for better governance practices formed the basis of WoolProducers’ submission into this process, WPA said.
“WoolProducers have been advocating for changes in the operations of AWI for a number of years to better serve the interests of Australian woolgrowers.
“The report vindicates these calls.
“WoolProducers expect that AWI will accept and implement all recommendations without delay and as soon as possible.”
The peak body also offered to assist AWI to implement these changes in any way possible and look forward to working with AWI collectively for the betterment of our woolgrower stakeholders.
Mr Littleproud also said wool growers pay levies towards AWI and the government provides AWI with $15 million in direct investment annually.
“Wool growers expect and deserve the best possible research and marketing, governance and performance.
“EY called for AWI to immediately implement the review with vigour and in a consultative manner, and I support this,” he said.
“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,” he said.
“I expect AWI to provide early and regular assurance to wool growers about its implementation of the review’s recommendations, and the government will closely monitor progress.”
For more information and a copy of the review click here.
John, my main interest is the preperatation of the wool clip. As a wool classer and wool merchant, I have classed and reclassed and tipped out 255,000 bales of wool over 39 years. You can go back through all the reviews and enquiries by AWI and others, and wool preparation is never mentioned. So much wool is poorly prepared, it is a disgrace. It is obvious to me that no-one at AWI knows the first thing about wool preparation. To them, it is all unknowns; what can be in a bale of wool. They obviously don’t care.
AWI review leader Andrew Metcalfe said the review’s wool grower survey revealed that many stakeholders believe that AWI have performed well in many regards and believed it should be recognised for its marketing research and development initiatives. When talking of the detractors in the survey, the term several is used often. So we’ve got many and several.. you work it out. Wool growers have a democratic construct and will want to keep it that way.
But Edward, why did you and the others with your opinions not nominate for the board of AWI to change industry direction? If your views are widely held, then you would be sure to be elected and others on your ticket? At least you had the opportunity; those rearing cattle do not.
Sorry John, very few in the wool industry have anything good to say about Australian Wool Innovation. The ridiculous schemes proposed over the years have mainly been change for change’s sake. In October 2014, the Wool Selling Systems Review started. It was always a stupid idea. It dragged on for years; a waste of time and money, and it accomplished nothing.
In November 2014, was this comedy masterpiece from AWI. “If every sheared could shear one more sheep per day, it would save the wool industry $980,000 per year.” Who thought that up?
Then the WSSR morphed into the Wool Exchange Portal and Stuart McCullough was quoted as saying on 30 June 2017: “The Wool Exchange Portal would give savings of $38 million over fifteen years and that was good value.” Another comedy; that’s less than 0.7 of a cent per kilogram greasy on current sheep numbers. AWI has done nothing for anyone in the wool industry.
Wal Merriman and his board have done a great job for the Australian wool producer and we support whatever decision they come to in implementing the recommendations of the EY report. As grass-fed cattle producers, our concern is Minister David Littleproud’s immediate insistence for the adoption of all recommendations of the independent report by EY is totally contrary to ex-Minister Joyce’s insistence on the adoption of the recommendations of the Senate report into our industry structure delivered in 2014 and still not adopted.
It is true at a meeting in Brisbane in December 2014 the then minister insisted all recommendations had to be adopted by industry or he would enforce them. This never happened and the current minister seems to be following the same approach regarding the representation of grass-fed cattle producers.
When will our industry have a cattle producer-owned organisation with directors elected by our members similar to that operating in wool innovation with AWI for the past 13 years? Our members only ask for the same rights enjoyed by wool producers, beef processors and live exporters.
Minister David Littleproud should show some consistency in his policy and move to insist on the adoption of the Senate recommendations into the restructure of the grass fed cattle industry.
Australian Cattle Industry Council