AWI shareholders to vote on 10-year director term cap next year

Terry Sim, October 22, 2018

AWI CEO Stuart McCullough at the Australian Sheep and Wool Show.

WOOL producers will be to able vote on key recommendations from the Australian Wool Innovation’s review of performance and governance in March next year.

However, the board is yet to explicitly endorse review recommendations that would set a 10-year director term cap, redefine an independent director and add transparency to the board election and proxy processes.

AWI chief executive officer Stuart McCullough confirmed today that the five issues listed for shareholder consideration on the AWI Review of Performance Implementation Portal (ROPIP) would be put to growers in mid-March next year.

“We haven’t finalised the date, but that’s about where we are looking.”

However, this is still no clear indication that the resolutions to be put to AWI shareholders – dealing with proposals for a 10-year director cap, a new independent director definition, the director candidate process and election proxies – will be endorsed by AWI directors consistent with the review report.

Although Minister for Agriculture and Water Resources David Littleproud has said he expected AWI to implement all of the review’s 82 recommendations, Mr McCullough said the AWI board was “not there yet” in deciding whether the shareholder resolutions would be put with a board endorsement for approval or disapproval.

“We are a long way off doing a notice of meeting.

“A notice of meeting we will aim to get out six weeks prior to the EGM, which is a requirement, so the language in that, we have got to finalise,” he said.

AWI portal indicates no agreement on key review recommendations

AWI’s ROPIP currently states the board it agreed with 75 of the review’s recommendations, with five needing shareholder consideration, indicating the board does not agree with them. Another two recommendations covering AWI board nominee selection process and structure changes are agreed with “in-principle”.

“That’s right, it’s up to the shareholders to agree or not to agree; it’s their right.

“Don’t assume because they are going to shareholders, that the board disagrees with them,” he said.

“Any constitutional change, Terry, requires a vote by shareholders; that’s what happens with non-listed public companies and listed public companies.

“These are things that require constitutional change and affect the DNA of the company and it’s the board’s duty to make sure that they go to a shareholder vote,” he said.

He did not know or have a view on whether the resolutions would or should be put to shareholders with a board recommendation.

AWI’s board, in not explicitly agreeing with all the review’s recommendations and meeting an October 19 deadline for submission of an implementation plan, has effectively delayed shareholder consideration of the key recommendations to beyond the current WoolPoll 2018 ballot that concludes on November 2 and the 2018 annual general meeting on November 23. If the review’s 10-year director term cap, recommendation had been implemented this year, it would have ended the AWI board tenure of  chairman Wal Merriman’s tenure and that of directors Meredith Sheil and David Webster.

On Friday, the AWI board met the October 19 deadline for submission of its review recommendation implementation plan to the Department of Agriculture and Water Resources. The office of the Minister for Agriculture and Water Resources David Littleproud also received AWI’s implementation plan for the review recommendations. AWI executives will now meeting with DAWR officials in Canberra this week to discuss the AWI plan before its public release, possibly by Friday this week, Mr McCullough said.

“We are going to have a bit of time with them in the next day and a half to get their views on things; that’s the prudent way of doing it.

“They are our partner in this and it is prudent for us to get their feedback on it; that’s good manners.”

Mr McCullough confirmed that the five recommendations going to shareholders would not change much from those listed on the ROPIP – review recommendations 1.10.4, 1.11.3, 1.9.1, 1.9.10 and 1.12.1. He said AWI was trying to model something with the two BNC recommendations — 1.12.4 and 1.12.3 — agreed to by the board in-principle that “makes everyone happy.”

WoolProducers seeks AWI board endorsement

WoolProducers Australia chief executive officer Jo Hall said WPA looked forward to seeing the AWI review implementation plan.

Ms Hall said WPA never saw a need for any of the 82 recommendations in the Ernst&Young AWI ROP to go to shareholders.

“We had hoped that the board would show leadership in this process and implement all recommendations as per the EY review.

“We did not see the need for an extraordinary general meeting to consider review recommendations, as we believe the growers would have been able to distinguish levy issues versus constitutional changes at the AGM,” she said.

“However, when these recommendations do go to shareholders, we fully expect that the AWI board will endorse them as the recommendations were all made independently to improve the operation of AWI – so why wouldn’t the board support them?”


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  1. John Wallace, October 24, 2018

    Nine years is an extended tenure; personally; any longer and you are up for group thinking.
    On the matter of wool tax: is AWI a protected species in the RDC space? A 2 percent levy breeds inefficiencies and bad behaviour; lean and mean will get the job done. Producers have to nail the cheque book shut on drought, so why are these people immune?
    As for our letter from Prince Charles; I would suggest this is how far out of touch you are with wool customers and consumers. Supply is what has driven the current wool price, not marketing.
    The AWI spend on R&D is questionable to say least; they take no notice of producers and go off on strange tangents. The shearing industry association in Western Australia struggles to get funding. I would have thought shearer availability and expertise would have been identified as a high risk to the wool industry.
    AWI seems to have forgotten that Merino sheep produce wool and are a very desirable protein source. It needs to spend some of my levies on feed base and other projects that cross over between meat and wool.
    Until the stud industry and their mouthpiece AWI steps into the 21st century and starts talking kilograms of wool per hectare and kilograms of meat per hectare instead of wool cut per sheep, the wasted levy spend will continue. The graph of wool industry growth to other enterprise is a joke. Have they worked out that the fight for acres is real?
    Last time I looked, doing same thing over and over and expecting a different result was madness. If you are going to be insolvent with 150 million dollars, give it back to growers and make way for a new streamlined and efficient RDC.

  2. Andrew Farran, October 22, 2018

    This is no less than what we have come to expect from the AWI Board. The board needs freshening up from time to time and the nomination process in itself is obstructive in this regard. Moreover, a ten-year term is ample for board membership. If the input and skills of the three members whose tenure has in effect been saved are indispensable, then employ them as consultants if they could hold down that level of appointment. If not, they shoudn’t be on the board anyway.
    It will be interesting see how the Senate Estimates Committe responds to this deviousness this week.

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