Confrontation escalates further between Canadian fertilizer maker and hedge fund ahead of shareholder meeting
A bitter proxy battle between Canadian fertilizer maker Agrium and New York-based activist hedge fund Jana Partners escalated further, as Jana accused Agrium of ‘vote buying’ with its offer to pay brokers and advisers whose clients vote for its board member nominees at next week’s shareholder meeting.
‘The disdain for the voice of shareholders and willingness to squander millions of dollars of shareholder capital for board self-preservation that this demonstrates is stunning,’ says Jana managing partner Barry Rosenstein in a press release.
‘Equally stunning is Agrium's hypocrisy, given their claims of supposed broad shareholder support. We think Agrium's board should speak up and tell shareholders why spending their capital to try to buy an election is good governance or in the long-term best interests of shareholders.’
Agrium in mid-March offered to pay brokers and advisers 25 cents per share, up to a maximum of $1,500 per share owner, for votes from their clients in favor of the company’s board nominees at the April 9 meeting. The money will not be paid if Agrium loses the vote. The company says the payments are ‘proper and common in Canada,’ according to an article in the Wall Street Journal.
Agrium, meanwhile, accuses Jana of offering the Jana-proposed board members ‘special incentive payments’ for serving on Agrium’s board.
‘These payments are structured to incentivize short-term actions, even if they are taken at the expense of greater long-term value,’ Agrium says in its proxy materials. ‘This kind of ‘golden leash’ arrangement is unheard of in Canada and raises serious questions about the independence of Jana’s nominees, and their ability to act in the best interests of all shareholders.’
It says Jana’s campaign ‘is a Trojan Horse tactic aimed at securing board seats that Jana can then use to further its agenda of breaking up Agrium.’
At the heart of the dispute is Jana’s insistence that Agrium, which is the biggest retailer of crop nutrients to US farmers and a major fertilizer producer, spin off its retail arm and potash operations, approve board members with greater industry experience and overhaul a number of other company policies.
Proxy advisory firms also differ in their advice to shareholders ahead of the meeting, with Institutional Shareholder Services recommending that shareholders vote for two of Jana’s nominees, according to Jana, and Glass Lewis recommending a vote in favor of Agrium’s nominees, according to Agrium.
A vote for the company’s picks ‘would have Agrium continue to execute the integrated strategy that has delivered a 467 percent shareholder return and made Agrium one of the best performing stocks in North America since 2005,’ Agrium says in the notice of its annual shareholder meeting.
It says Jana would have Agrium ‘abandon its current strategy, break itself into three small pieces, and take other actions that will destroy shareholder value.’
