Lauren Krugel, The Canadian Press
CALGARY - The chairman of Agrium Inc. (TSX:AGU) says Jana Partners LLC is providing incentives to the nominees it wants installed on the fertilizer giant's board, undermining their independence and putting them on a "golden leash."
Agrium's current board and chief executive Mike Wilson have been outspoken critics of Jana, a New York-based fund manager that increased its minority stake in the company since it began advocating a major shakeup at the company.
In a letter to investors, Agrium chairman Victor Zaleschuk says "it is important to note that Jana’s dissident nominees have agreed to accept special incentive payments from Jana for serving on Agrium’s board."
Zaleschuk says in the letter, which accompanies a management proxy circular filed by Calgary-based Agrium, that the incentives are structured to support short-term actions even "at the expense of greater long-term value"
"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," Zaleschuk said.
The letter and proxy filing was made in preparation for Agrium's annual general meeting in Calgary on April 9, when shareholders will have a chance to vote.
The Jana proposal that has garnered the most attention has been to split up Agrium's retail business from its wholesale business. Agrium said Monday that Jana has proposed to spin off Agrium's potash business, too. Jana also wants to cut costs, allocate capital more effectively and improve corporate governance.
"Jana's campaign isn't about corporate governance, operating performance or board experience," Zaleschuk counters in his letter.
"It is a Trojan Horse tactic aimed at securing board seats that Jana can then use to further its agenda of breaking up Agrium. To that end, Jana has promoted an ever-changing but consistently flawed analysis of Agrium’s track record, business and Board."
Zaleschuk aid the facts do not support Jana's claims.
"You are invested in a company that has delivered a 467 per cent shareholder return since embarking on its current integrated strategy – a strategy that continues to create record results and significant and sustainable value. Jana wants to abandon that strategy, break the company into three small pieces, and take other actions that will destroy shareholder value."
In a slide-show presentation, Agrium also goes after the companies in which three of Jana's nominees were involved: UAP, which was acquired by Agrium in 2008, Brenntag and MSC Industrial. It points out weaknesses on each of those company's boards, including a lack of independent directors with distribution experience.
Jana has said UAP's David Bullock, Brenntag's Stephen Clark and MSC's Mitchell Jacobson would fill the retail distribution experience gaps on Agrium's board. It also wants to appoint Jana managing partner Barry Rosenstein and former Liberal agriculture minister Lyle Vanclief.
Agrium has appointed former Viterra CEO Mayo Schmidt and former John Deere executive David Everitt to its board to add distribution expertise and gave Jana the opportunity to appoint one of its own directors last month in a bid to end what has become a bitter proxy fight. Both sides have offered differing accounts of what caused talks to break down.