AUSTRALIAN Wool Innovation intends to find a way around a performance review recommendation for a 10-year director term limit for at least one sitting director, even as it asks shareholders to approve the measure.
A 2018 performance and governance review of the wool grower levy-funded body recommended that a 10-year maximum be put on director terms and the AWI board finally agreed to this last month.
But Sheep Central has confirmed with AWI that current director David Webster will not have to stand down if a proposed ten-year director term resolution is passed at AWI’s 2021 annual general meeting.
This is despite the Western Australian director, who was first elected the board in 2008, clocking up his 13th year in 2021, and an AWI spokesman’s admission that the resolution will be retrospective — although not for Mr Webster.
Although an unidentified AWI spokesman has told Sheep Central that the resolution has not yet been written “by external lawyers”, the spokesman agreed it is the intention of the AWI board that it be written in such a way that if passed, it would allow Mr Webster to continue on the board until 2023.
“Yes, in the interest of an orderly transition of directors,” the spokesman said.
“David Webster was re-elected to the board in 2019, his term expires in 2023.”
When asked what would be the status of any AWI director that has served 10 years up to the time of the AGM, if the ten-year resolution is passed, the spokesman said AWI chairman Colette Garnsey has announced her retirement irrespective of the resolution being passed.
“The resolution — which would require a minimum of 75 percent shareholder support — has not yet been written by external lawyers.
“But in the interests of good corporate governance it is envisaged that it will take into consideration the orderly roll off of directors to protect the interests of the company and its shareholders.”
Ms Garnsey was elected to the AWI board in November 2011 and was appointed as chair of the AWI board on 9 November 2018 following Wal Merriman’s resignation. When she announced the shareholder vote on a 10-year tenure resolution last month Ms Garnsey said she relished her role as an AWI director.
“But under the ongoing board renewal process, this year’s AGM will be the right time for me to stand down as a director and as chairman,” she said.
Potentially two of three current AWI directors will stand for re-election this year – Don Macdonald, who was elected in 2017; James Morgan, elected in 2013; and Jock Laurie, elected in 2015. If the proposed resolution is truly retrospective and is applied to other current directors, except from Mr Webster, then Mr Morgan, if he stands and is elected, would theoretically only be able to serve two years of a four-year term before his 10 years were up.
When asked if it is the AWI board’s intention that the proposed resolution allow any current AWI director, including those standing in the 2021 election, to serve potentially more than 10 years from the date at which they first joined the board, an AWI spokesman responded with:
“Constitutional changes require the best legal advice and good consideration.
“AWI will be guided by Freehills in this regard and the resolution will be put to shareholders for their consideration,” he said.
“Once again, in the interest of good corporate governance it is envisaged the resolution will take into consideration the orderly roll off of directors to protect the interests and corporate knowledge of the company.”
Seems contradictory, but Webster can serve on – Keniry
Former AWI director and WoolPoll chairman John Keniry agreed that it seemed contradictory that the proposed resolution would be retrospective but not apply to Mr Webster.
“But in my view, if the resolution simply says that there is now a limit of 10-year terms then that automatically doesn’t exclude David Webster from continuing, because he was elected by the shareholders to serve a four-year term, and unless the shareholders specifically vote to change that decision then he can serve his four-year term.”
AWI board’s intention is ‘appalling corporate governance’ – Olsson
However, Australian Wool Growers Association director, Chick Olsson, who failed in an attempt to be nominated for the 2019 AWI election, said the board’s intention on the tenure resolution was a case of “double standards”.
“It is absolutely appalling corporate governance and it’s why Senator Glenn Sterle mentioned the possibility of a Senate inquiry into AWI (in Senate Estimates.”
“It certainly looks like Webster is being influenced by past directors,” he said.
“Of course it is double standards, it’s more than double standards, it is just poor corporate behaviour.
“One rule for them and another rule for us – it’s typical of all dictatorships,” Mr Olsson said.
“It seems to be extraordinary that everyone in the industry thinks that 10-year terms are a healthy thing and now there is a director who says no, it doesn’t suit me, I want 15 years.
“How the board could actually support that is actually a huge indictment on the chair and the whole board,” he said.
“What’s the point of having the 10-year resolution in the first place then, what’s the point if they are not going to abide by it?”
Mr Webster’s position was foreshadowed – WoolProducers
WoolProducers Australia president Ed Storey said it had been foreshadowed that Mr Webster would continue on the board until 2023, when he would not seek re-election, in AWI’s media release last month.
However, Mr Storey said he would have to see the resolution motion before commenting further, but he expected that it would come into effect after the AWI annual general meeting if it was approved.
“I can’t really comment without seeing the motion.”
Neither Mr Webster Senator Mr Sterle could be contacted for comment.