Feb. 20, 2013
/PRNewswire/ -- JANA Partners LLC today released the following open letter to shareholders of Agrium, Inc. ("Agrium") (TSX / NYSE: AGU). Agrium announced at the end of the day last Friday that its Annual General Meeting of Shareholders will be held on
April 9, 2013
and that shareholders of record on
February 25, 2013
will be eligible to vote.
February 20, 2013
AN OPEN LETTER TO AGRIUM SHAREHOLDERS: Why We Said No to the Status Quo at Agrium, and Why You Should Too
Dear Fellow Agrium Inc. Shareholder,
We have invested more than $1 billion in Agrium, making us the largest shareholder with approximately 6.5% of its outstanding shares, because we believe Agrium can generate substantial additional upside for all shareholders by addressing 5 core issues: Costs, Controls, Capital Allocation, Conglomerate Structure and Corporate Governance.
Agrium however refuses to fully address these issues, and has subverted traditional notions of good governance by fighting off our highly qualified independent nominees and choosing their own directors merely because we have questioned its performance and strategy. We note that the market has had a swift and negative reaction to this refusal to engage, including a 7% share price decline last week after Agrium's new directors were announced and our rejection of its insufficient settlement offer.
Upending Notions of Good Corporate Governance.
Agrium has sought to turn traditional notions of board oversight of management upside down by making any questioning of management's prior performance or strategy a disqualification for board service. When asked recently why Agrium refused to consider our candidates, Agrium's CEO responded that
"It is not typical to bring someone on the board who tells you your strategy is flawed and indirectly tells you you're incompetent."
The Globe & Mail
, 2013). JANA has of course never called management "incompetent." We have simply identified areas of substantial opportunity and proposed qualified nominees to help explore them. This same fortress mentality was on display in our recent settlement discussions, with Agrium demanding at one point that we drop all of our issues in exchange for merely proceeding with talks, and refusing to even speak to our nominees.
This thin-skinned and insular attitude leads us to conclude that Agrium's new directors have been pre-screened to ensure compliance with the status quo. We further note that Agrium did not cast a very wide net to locate new board appointee
, given that Viterra's distribution business was acquired by Agrium in a transaction in which he earned over C$30MM. We also note that our board nominees stand to benefit only to the extent that all shareholders benefit and each meets the definition of "independence" under the CBCA, NYSE rules, and Agrium's own governance guidelines.
Just last Friday, Agrium doubled-down on its approach, shifting up the usual date of its annual meeting by over a month in an apparent attempt to cut short this debate. While we are confident that this move is too little, too late, it further paints a picture of serious governance issues at Agrium. As one analyst put it, "
Friday after the close at the start of a holiday weekend isn't typically when company Boards disclose things they are proud of, but you can't fault the Agrium Board for consistency. An abrupt shift in the dates for the shareowner meeting looks designed to perpetuate the lack of transparency and accountability that seems to be the (very) unexpected legacy of CEO Mike Wilson. Investors who have been supportive of Agrium thus far will have to think hard about whether this is the sort of behavior they want to encourage elsewhere, when they cast their ballots in this accelerated election.
" (Credit Agricole / CLSA,
Feb. 19, 2013