LEGISLATION to enforce Australian Wool Innovation’s compliance with all recommendations of the recent performance and governance review has been mooted again by the nation’s Minister for Agriculture and Water Resources David Littleproud.

AWI chairman Wal Merriman is attempting to delay until next year a shareholder vote on key review recommendations, including the 10-year director term cap suggestion that would end his tenure and that of directors Meredith Sheil and David Webster if implemented this year.

A 10-year director term cap would also mean the departure of Mr Merriman’s expected successor, the current AWI deputy chair Collette Garnsey, in 2021.

Mr Merriman last week proposed in a letter to wool industry bodies that nine “constitutional issues/recommendations” arising from the review be put to shareholders at an extraordinary general meeting early next year, rather than at the 2018 annual general meeting in November.

The AWI chairman claimed that he was “asked to do this by the Minister”; however, Mr Littleproud this week said he did not ask Mr Merriman to send the letter.

“I did suggest he take feedback from his stakeholders on their views, as it would be silly for him to act without (the) support of his stakeholders.”

Mr Littleproud told Sheep Central he has “been clear all along I expect AWI to get cracking on implementing recommendations from the Ernst & Young review as soon as possible.”

“EY states only four of 82 recommendations require shareholder approval.

“I’d prefer AWI showed leadership on this rather than forcing me to legislate,” he said.

“The AWI board should signal intent to comply with all recommendations and take that to shareholders,” Mr Littleproud said.

The four recommendations requiring shareholder approval relate to proxies, skills-based board structure and the 10-year director term cap, a spokesman said.

In July this year after the AWI review report’s release, Mr Littleproud told the ABC he would consider an “Armageddon approach” with legislation to enforce the adoption of the recommendations if AWI failed to implement them all. Legislative options open to the minister include under the Wool Privatisation Act 2000 or special legislation.

At that time, AWI chief executive Stuart McCullough also told the ABC that AWI would go through the recommendations “one by one,” but he was unable to guarantee all would be implemented. He has told Sheep Central AWI was “in the mood” to adopt the reviews 82 recommendations and was seeking legal advice, but the 10-year board term recommendation was one of several that were likely to require a constitutional vote of shareholders.

No formal commitment from AWI to implement all recommendations

On the SkyNews-Weekly Times AgShow last week, Mr McCullough said AWI had accepted 60 of the review’s recommendations “outright”, but nine or ten, including the 10-year director term cap, may have to go to a constitutional vote “largely because they change the DNA of the company”. He indicated writing the recommendations in the AWI board charter would not give “permanency.”

“Permanency is an important thing too, that they stay there and the next group that comes in, whoever they might be, just doesn’t strike them out of the board charter.”

He said the company the board has “holistically embraced” the EY review report.

“We are not stalling, we are not dragging our heels, we will get on with it and we want to knock it off by the end of this year ideally.”

Mr McCullough also said the review’s 10-year director term cap recommendation meant Mr Merriman, Mr Webster and Dr Sheil would lose their board seats if 75pc of voting shareholders supported it.

“And should that get through, you would lose director Garnsey in a year or so, so you know it’s a big thing – it’s a big deal for us.”

However, Sheep Central believes the AWI board has not yet formerly resolved to implement or support implementation of all the review’s 82 recommendations and has not submitted an implementation plan to the Department of Agriculture and Water Resources. Mr McCullough said AWI’s review implementation plan will be provided to the department on Friday 19 October, 2018.

“What is important to note is ahead of this date, in the coming weeks, AWI will be making live a dedicated website that will allow all levy payers and interested parties to track the implementation progress of all 82 recommendations.

“We’re pleased to report of the 82 recommendations, around 60 are already underway, in fact some of these have already been completed.”

WoolPoll panel “nervous” about “mix up” with AGM review votes – McCullough

Mr Merriman has also suggested in his letter last week that AWI board members have concerns about the confusion caused with an AGM and WoolPoll simultaneously being debated this year and that the board is keen to get “clear air” for WoolPoll. He proposed the presentation of any constitutional issues or recommendations to shareholders at an EGM in early next year before the director election at the November 2019 AGM.

Mr McCullough also told AgShow that the WoolPoll Panel is “quite nervous about the energy or the mix-up between the WoolPoll and a constitutional vote at the AGM.

“I’m not sure, but it could go to an EGM early next year, either way, most of these things play out in the 2019 AGM, because it is a contested election in 2019.”

However, WoolPoll panel chairman Sydney Lawrie said he did not suggest nor express to AWI any concern about potential confusion between the WoolPoll vote and consideration of the AWI review’s recommendations.

“Within our group we discussed it, only to keep our messaging really clear on what WoolPoll is.

“We discussed it within our group just to make sure that we had as much clear air around the WoolPoll process so there is no confusion … and working with our marketing company so it is really clear.”

Mr Lawrie said neither he nor the panel suggested to AWI that consideration of the review’s recommendations be deferred to give the WoolPoll vote more “clear air”.

“We’re not involved in what happens within that (AWI Review) report; we’re just there to encourage people to make sure they vote and read the voter information kit thoroughly to make a good conscious decision.

“Nothing formal has ever come out of our panel, it’s not our decision, but of course we want as much clear air around this.”

WoolPoll panel member Ed Storey said he did not believe the panel had expressed any concerns to the AWI board about the WoolPoll vote and the review’s recommendation being held this year.

He hoped that the WoolPoll vote was not being used by AWI to delay consideration of the AWI review recommendations.

WoolPoll panel member Rob Ingram said if there was any confusion about the difference between the WoolPoll vote and likely consideration of review recommendations at an AGM it was because AWI’s communications have not been clear.

“If there is any confusion AWI needs to mobilise some professional communication resources to resolve it.”

AWI and government should release legal advice

Peak wool grower body WoolProducers Australia and the Australian Wool Growers Association today said AWI and EY or the Federal Government should immediately release details of the review recommendations they believed AWI shareholders should vote on, including any legal advice supporting this.

AWI has not complied with the requests of peak wool grower body WoolProducers Australia to clarify what nine issues/recommendations require a shareholder vote and to release the legal advice supporting this.

AWGA and WPA oppose deferring the AWI review recommendations to a shareholder vote at an EGM next year.Both bodies have repeatedly said AWI should support and implement all of the review’s recommendations immediately.

“WPA is disappointed that AWI have chosen not to provide the reasonable information that we requested in order to determine if an EGM is required.

“It appears AWI continues to believe it does not need to be transparent to levy payers,” she said.

“The problem regarding which recommendations need to be put to shareholder vote is that there is so much ambiguity.

“AWI is saying nine recommendations, the minister is saying four, whilst we believe the board could show leadership and implement all recommendations through board charters and then an amended constitution be put to shareholders to vote on,” Ms Hall said.

“We immediately raised this uncertainty with the Department of Agriculture and Water Resources (DAWR) after the release of the report, only to be told they can see no confusion.

“We are beyond frustrated with this situation.”

Ms Hall said wool growers need to be provided with sufficient, unbiased information to make the decisions on the review recommendations.

“However, it is important to note that EY has made all recommendations in order to improve the operations of AWI, which is why WPA is calling for all 82 recommendations to be implemented immediately.

“WPA strongly believes that wool growers can distinguish between constitutional changes and the levy setting vote, WoolPoll,” she said.

“Any confusion caused by the two issues can be attributed to AWI, who up until this WoolPoll had been active in saying to growers in previous WoolPolls that if they didn’t like how AWI performed they could vote zero percent.”