PRESSURE is continuing on Australian Wool Innovation and its board nomination committee to release documents and information relating to a recommendation to re-elect former AWI chairman Wal Merriman and fellow director David Webster next month.
The AWI BNC recommendation to re-elect the two directors has been widely criticised this week and has prompted a call by peak grower group WoolProducers Australia for more transparency around the decision.
The two sitting directors were recommended for re-election along with two other candidates — Victorian producer Noel Henderson and New South Wales veterinarian Michelle Humphries.
Mr Webster has been on the board since 2008 and Mr Merriman has been a director since 2004 and chairman from 2008 to 2018, when he resigned after being at the centre of several industry controversies concerning his behaviour and AWI governance.
These included Mr Merriman covertly observing fellow breeders in a focus group behind a one-way mirror, swearing at an ABC reporter, appearances at several Senate Estimates hearings and questioning of his influence and independence in an EY review of AWI’s performance and governance.
Dr Mary Corbett this week defended the BNC’s recommendations as independent and non-binding to Australian Wool Innovation shareholders.
The government-appointed BNC chair said deliberations of the independent and expanded BNC for this year’s round of AWI board nominations were moulded by recommendation 1.12.3 in the Ernst & Young 2018 Review of Performance (ROP).
“In assessing each candidate, the BNC considered the required skill set identified in the Statutory Funding Agreement.
“Additionally, each candidate was discretely assessed with consideration to the gaps which would ensue with the three members retiring, the diversity of skills, gender, geographic location, the experience and knowledge of the wool industry and of the organisation, and their likely contribution to the board,” she said.
“Of importance to note is the objective and prudent process the committee followed which included the use of a weighted evaluation matrix, which quantified each candidate interview and explored candidate’s particular skill set, their motivation for applying to be on the board of AWI, their knowledge of the industry, the company and the company’s strategic plan, as well as their understanding of corporate governance.
“The BNC report has been accepted by the AWI board in its entirety and as previously indicated by AWI, the BNC’s full 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.”
An AWI spokesperson said the BNC’s report named four director candidates it believed have the optimal skills and experience to serve on the board of the company.
“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.”
Dr Corbett has declined to answer further questions about the BNC process, including Sheep Central requests to:
– outline the skills gaps that the BNC thought would ensue with the three directors retiring
– release the weighted evaluation matrix and how each director candidate fared on that system. Especially how the four recommended candidates rated for motivation, knowledge of the industry, company and strategic plan, and understanding of corporate governance.
– disclose who devised the weighted evaluation matrix and provided it to the BNC.
– disclose whether the research and development skills of the director candidates were assessed and which of the four recommended candidates is regarded by the BNC as having skills in these areas.
– disclose why the BNC apparently ignored the various recommendations of the EY Review in regard to corporate governance, director independence and conflict of interest, and the former chairman’s prior BNC and election influence, and industry behaviour highlighted in several Senate Estimates hearings.
– disclose whether the report on the assessment of director’s independence was used by the BNC in its determinations
– disclose whether the BNC rated the candidates on their company and governance values and ethics.
More transparency needed – WoolProducers
WoolProducers Australia president Ed Storey said the geographical location of board candidates is “completely irrelevant and should not have been a consideration.”
“If gender was considered, how did they effect that, they have failed to meet gender diversity as a key criteria — explain that,” he said.
Mr Storey believed the weighted evaluation matrix needed to be released by AWI.
“Because it is very unusual for the ex-chairs to remain on boards for length periods of time and to explain the reason behind it, the BNC needs to be more open and transparent to justify it.
“And that requires commentary from the chair of the BNC, not AWI.”
WPA chief executive officer Jo Hall said she believed the four recommended candidates lacked the research and development skills needed by the board, while production skills was over-represented.
“Without the full knowledge of how they weighted skills in considering each of the candidates, a glaring omission seems to be research under the required skills matrix.”
“Where is the researcher on the research and development corporation board?”
WoolProducers is also still seeking the release of the report assessing each AWI director’s independence.
WAFarmers supports WoolProducers
WAFarmers said the function of the BNC was intended to incorporate recommendations following the Ernst Young (EY) Review and today supported WPA in questioning the independence of the BNC from AWI oversight.
WAFarmers wool spokesman Steve McGuire said the transparency that was expected in the BNC process did not appear to eventuate.
“As levy payers, we consider the implementation of the EY report a failed process as it appears AWI has effectively rejected the key recommendations of the review.
“We now await the federal agricultural minister’s response to this rejection of her and her predecessor’s, along with wool industry groups attempts to improve AWI board governance,” he said.
“The EY report recommended limiting board tenure to 10 years to encourage renewal, yet the BNC has recommended one candidate who has a current tenure of 16 years and the other with a current tenure of 10 years.
“With these candidates both up for board re-election, I find it hard to believe how they intend to address the required governance and cultural change AWI levy payers are expecting from their RDC,” Mr McGuire said.
“AWI needs to realise that many levy payers are continually dissatisfied by the lack of transparency and this needs to be addressed.
“It appears that a select few continue to pull the strings, and levy payers are continuing to question the process,” he said.