FORMER Australian Wool Innovation chairman Wal Merriman and fellow long-serving director David Webster have been recommended for re-election through a process being questioned for its lack of independence and transparency.
AWI today announced its board nomination committee has recommended four candidates for three director positions – sitting directors Wal Merriman and David Webster, New South Wales veterinarian Michelle Humphries and Victorian stud breeder Noel Henderson.
The AWI announcement has led peak grower body WoolProducers Australia to question the transparency and independence of the AWI board director nomination process. WoolProducers said it now has no faith in this process or the entire review of performance and governance conducted by Ernst-Young in 2018.
WoolProducers president Ed Storey said AWI’s announcement before the BNC took their decision to the AWI board and independently declared its recommended candidates, raised questions as to whether AWI board had influenced the selection and naming of the BNC’s recommended candidates.
“We hope not and we hoped that wouldn’t happen, but we don’t know now, because they took it to the board first – Mary Corbett (BNC chair) is the one that needs to clarify that.”
Mr Storey said the role of the BNC was to match the number of candidates to the number of vacancies.
“There are three vacancies and they’ve recommended four candidates – what is going on there?
“You could mount an argument they have therefore failed in their brief, to do their job.”
EY Review a complete waste of time and money – WPA
Without specifically citing the skills the recommended candidates would bring to the AWI board, AWI today said its BNC has presented its independent, non-binding recommendations to shareholders, naming four director candidates it believes have the optimal skills and experience to serve on the board of the company.
The recommendations, which shareholders are not obliged to follow, were made after the BNC met on 25 September to confirm the eligibility of candidates for the three board director positions to be decided at AWI’s Annual General Meeting on 22 November, AWI said.
“The BNC is confident that the nominees recommended, individually and collectively, will provide the appropriate and necessary balance of skills required by the AWI board.
“The BNC also considers the nominations will deliver to the board a diverse composition of experience and outlook to enable the company to fulfil its responsibilities to shareholders and stakeholders and deliver the outcomes of the 2021 Strategic Plan,” the AWI release said.
However, WoolProducers president Ed Storey said: “These nominees may very well possess the skills that BNC believes fit the skills matrix required under the Service Level Agreement, but the issue that we have is that the BNC recommendations went to the AWI Board without being made public first,”.
“That coupled with the fact that there has been no reasoning behind the recommendations means that the whole process is questionable,” he said.
The AWI’s media release states that the function of the BNC was ‘shaped’ by recommendation 1.12.3 of the Ernst Young (EY) Review; however, WPA said that recommendation also states that this process should be ‘robust and transparent’.
“This particular recommendation was one of the six that was negotiated between AWI and WoolProducers; however, these negotiations only referred to the composition of the BNC.
“WoolProducers certainly believed that the requirement for enhanced transparency of the process would have been upheld by AWI,” Mr Storey said.
“WoolProducers raised our concerns over the lack of transparency of this process with both the Department of Agriculture and Minister McKenzie’s office over the past few weeks, who have done nothing,” Mr Storey said.
“Unfortunately, we are now of the firm belief that the entire EY Review was a complete waste of time and significant money, which cost taxpayers and wool growers an astounding $913,827.”
“All WoolProducers have ever wanted from our research and development corporation is to be transparent and accountable to their compulsory levy payers,” Mr Storey concluded.
“Our view is that the removal of clause 13.3(d) of the constitution, changes to the BNC (board nomination committee) and entrenching the ability to identify and elect directors who reflect a broader skills based board will assist in alleviating this inherent lack of independence.”
Report on director independence not released – WPA
Mr Storey said part of WPA’s negotiations with AWI on the review recommendations included questions about director independence. WPA was assured that a report on an assessment of the independence of current directors would be released.
“Where is that report? We were assured there would be a lot more transparency around that and that it would be published well before the election.
“Dr Meredith Sheil in one of the meetings we had, provided that assurance to us.”
Former chairman Merriman, first elected in 2004 and Mr Webster, elected in 2008, (along with retiring director Meredith Sheil) were indirectly identified in the EY review as having “questionable independence based on number and materiality of registered interests and length of tenure.”
The review said the majority of AWI directors are wool levy payers and active players in the wool industry.
“This creates an inherent conflict of interest,” the report said.
Ms Sheil also sat on the AWI BNC, along with James Morgan, which the review recommended should have his independence regularly assessed given his number of registered interests.
Dr Corbett was appointed by the Department of Agriculture, which under former Minister for Agriculture David Littleproud and current minister Bridget McKenzie, has allowed AWI to negotiate deferred implementation of key EY Review recommendations, including a 10-year director tenure and changes to the candidate nomination process that allowed the addition of another AWI board member to the BNC. The final BNC member was international executive recruitment firm Heidrick and Struggles Sydney managing partner Guy Farrow.
BNC recommendations not true to EY Review intent
Australian Wool Growers Association director Chick Olsson who has been declared unable to stand in the 2019 AWI election said the BNC recommendations showed there was no point in any truly independent candidate standing for a board position.
“This needs to be fully opened up to a Senate inquiry.
“This is potentially a clear abuse of levy payer and tax payer funds,” he said.
“The question is what is the department going to do about it, otherwise there is no point in having any more reviews?”
Former AWI director John Keniry said the BNC recommendation was not following the spirit or the intent of the EY Review, “to re-elect people who have been there for over 10 years.”
“The industry needs new blood and that’s not enough new blood.
“Growers get to vote, so it is going to be up to them.”
AWI said its shareholders will be entitled to vote for any of the eight director candidates who are standing for election to the board at the AGM. The three candidates with the most votes from shareholders, in person and by proxy, will be elected to the three vacant positions. The other election candidates are NSW wool grower and former director Paul Cocking, NSW wool grower and stud breeder George Falkiner, South Australian wool grower and former researcher Janelle Hocking Edwards and NSW consultant Philip Holmes.
AWI said the BNC is confident the candidates recommended, individually and collectively, provide the appropriate and necessary balance of skills required by the AWI board.
“The independent and expanded composition of the BNC for this year’s round of AWI board nominations was shaped by recommendation 1.12.3 in the Ernst & Young 2018 Review of Performance (ROP), which outlined the opportunity to enhance the governance of the process,” AWI said.
The BNC’s recommendations will be provided with the notice of meeting, which will be sent to AWI shareholders from October 21 ahead of the company’s AGM.
Dr Corbett refused to answer questions today, referring Sheep Central to AWI. An AWI spokesperson said AWI cannot provide comment on behalf of Dr Corbett, “who in accordance with recommendation 1.12.3 in the Ernst & Young 2018 Review of Performance (ROP) was independently appointed by the Federal Government.” Ms McKenzie was unavailable for comment due to parliamentary commitments.
By the way…recommending Merriman or anyone else is not a papal decree….You do not have to vote for him. Giving four people gives you the option of not voting for him or any one other. Be grateful for the chance and use your judgement well. Don’t get hysterical, decide what change is needed and work on it. It will not happen overnight so you have to be solid and widespread…panoramic…in your thinking, then act.
There is nothing whatsoever wrong in nominating four people for three board positions. More desirable would be nominating six people to provide a choice for each skill set. As the purpose of boards and chair is little known, their purposes include keeping a continual overview of the factors affecting the organisation they serve and the chair should ensure this is done as a continuum and exhaustively. Board recommendations go then to the CEO who may or may not be a member of the board and is not uncommonly, at odds with the board.
Whilst the membership should be well served by the board members’ skill sets and relationships strict purposefulness and not mutual can-top pulling and backslapping accompanying the often incredible benefits board members receive. The basis of selection really should be decided by those the organisation serves, at the outset and periodically although commonly decided at stacked and vote-machinated AGM’s using falsified reporting. Boards utilise Directors, but Boards should be servants of the goals of the organisations.
These days the emphasis is; however, more on the organisation’s survival and progression rate than serving shareholders and stakeholders.
The using of consultants, here Ernst and Young is naïve and wasted money to be told what people already know. “E.Y’s” ‘robust and transparent’. statement is trite humbug. It deserves the teenagers’ “uhh…derrrr!!”. , but then you only got the $1m report, a composite, I think perhaps of other reports with the names changed. Cynical?…perhaps but I have read very expensive reports and sometimes found them a farce.
Unless you, the members, are utterly incompetent or besotted with your own opinions you do not need to feed cash to mega-rich (or mega-anything but inspirational and ground-breaking) consultants. One consultant-set for example that affected us all in a massive disaster was the shambles created through those consultants at massive fees. They parasited on the taxpayer in apparent ignorance of reality and recommending to the worst management possible, the incompetence from start to finish of a major project which bankrupted us. No one was held accountable for the death destruction, mayhem and rectification costs.
Directors and the chair, are paid what are commonly fabulous sums of money and perks, have not uncommonly little experience with the purpose, problems or depth of the particular organisation, yet they carry on regardless until a better offer comes along, irrespective of their poor performance.
One commentator stated any person with 50 supporters should be able to stand…Maybe so but how and with what intent is that person nominated, supported by whom and how many can the ‘membership’ tolerate and stay sane in choice? Decide whether the board can vet or not vet and as a group demand the board comply, by changing articles and policies, but have a very competent look at the alternatives before it.
Another said “We must firstly find the research leadership to set the goals to lead our industry out of the hell of a mess we are now in.” I can agree with that very much; however, it’s the board’s job, at least in theory.
You might look at the articles and see how to get rid of an ineffective board…who’s legal fees in contest to you, you will also be paying. You might also constantly protest to the board about realistic issues — not petty personal feelings demonstrating narrow outlook — and demand audience at the AGM in which you outline the incompetence and demand the board get its act together or resign.
The success of an organisation can be very much attributed to the expertise, clarity, example and experience of the chair and directors, but also and very much so, the chief executive officer. But he or she should be constantly fed market position and research by a competent board.
EY is quoted as saying “the majority of AWI directors are wool levy payers and active players in the wool industry”. Well, what would you expect them to be EY? Cricket bat makers, hoteliers, Boy Scout patrol leaders? Irrespective of what EY has rolled out of its repertoire at great costs, the board ideally has great experience and knowledge of the organisation and environment. If you don’t want that then what do you want? If Merriman is doubted, then the board itself should exclude him. Who’s to say the four nominees are better? What do you work from in deciding for whom to vote in general — their resumes, statements or personal selection of enticements?
Why not vote the whole eight out and start again, using the administration meanwhile. In closing, I suggest each of you researches what an ideal board does and how it functions, get together and decide what you want. Which is sane sensible and exemplary. Then demand of all the major stakeholders that the decisions be the basis of all future boards, in chair and every director, until change is unavoidable. Ultimately, in any organisation there is give and take. Decide as the membership what is possible, what is rational and come together as a force for change. It’s pretty Aussie to elect then moan about it for the whole elected period, but would it not be better to proactively hammer organisations, including our power-brokered governments to be very clear about what is being offered and what are the downsides of candidates so we have a clear vision, then vote and trust the overall judgement?
The wool industry’s leadership in recent years has been sorely lacking.
The current imbroglio gives one little confidence that Bridget is any better than Little to be Proud of.
i (have conflict of interests)
i (have vested interests)
i (poorly qualified)
i (employ mates and mates of mates)
i (have no skin in the game)
i (unlikely to get this salary from any other employer)
How is it tolerable that anybody who might wish to become a director of AWI has to be vetted?
Surely, any shareholder should be able to nominate (so long as they have support of say 50 other shareholders) and that shareholders have a genuine choice, and not have to choose those chosen by an unelected committee.
Vote for who you wish, but history tells us nothing will change the culture of this organisation; and it will never change whilst promotion and politics are in the mix.
What the wool industry needs is a new organisation, a new board and new staff with a new skillset and a brief focussed on increasing on farm productivity through serious peer-reviewed research.
We must firstly find the research leadership to set the goals to lead our industry out of the hell of a mess we are now in.
As I have commented on these pages before, I totally agree with Jim Gordon below; give growers a choice as to who receives their compulsory commodity tax for commodity research.
What needs to happen is for the RDC system to evolve like the compulsory superannuation has; from just industry funds to employee choice of fund. Registered research providers (of the growers’ choice) could receive levy funds from a central clearing house.
Other side benefits could be research is carried out from problems of a particular grower, not just what the majority want.
This problem could be solved overnight: give the levy payer a choice allowing individuals to pay their levies to other organisations. Then growers that are in love with the antics of AWI can support them and their decisions, with whoever they want on the board.
Minister for Agriculture, please give us a choice before we lose this industry.
We know who not to vote for; the AWI BNC picks.
Do not give the puppet chair any open proxies.
The only chance for AWI to survive now is to vote for the true independent candidates Cocking, Falkiner, Holmes, Hocking-Edwards.
The waste of $900,000-plus of government and levy payers’ funds, with no serious action from the EY review, is extremely disappointing. Many wool growers and industry representatives also gave up their valuable time to add to the EY review and again our industry leaders have been very weak and lack action. I wonder if we were to have a serious look in the mirror, from in front or behind, is our wool industry being managed with transparency and in the best interests of levy payers?
Andrew Michael, I think the wool industry needs to join together as one. The biggest problem with this industry is all the in-fighting. I think you are only interested in Andrew Michael and not the industry as a whole. I suggest you have a look in the mirror, as I believe you will see the problem with this wonderful industry. That is, people like you.
Thanks for your comments Dianna. Your comments put the wool industry in perspectives.
‘..I wonder if we were to have a serious look in the mirror, from in front or behind, is our wool industry being managed with transparency and in the best interests of levy payers?..’
Can I just ask, was this not the problem last time around?
Full names required in future for reader comments please Nick, as per our long-standing comments policy: https://www.sheepcentral.com/about-us/sheep-central-comment-policy/ Editor
This whole process stinks to high heaven. The fact that the AWI board thinks it’s levy payers (stakeholders) are a lot of fools reflects very strongly on its own thought processes.
The underlying reasons for the board’s failure to fully implement the EY report have been becoming clearer by the month. Further dissembling by the board will
only deepen the hole it has dug for itself. It’s a disgrace.