Jana Partners LLC failed at the April 9 Agrium shareholders meeting to elect any of its five nominees to Agrium’s 12-member board of directors. Jana is Agrium’s largest shareholder, with a 7.5 percent stake in the company. Jana earlier withdrew from negotiations that would have lead to it having at least one board member (GM Feb. 18, p. 1).
Early in the shareholder meeting, Alex Moore, a proxy holder, lodged several preliminary complaints, requesting to review proxies and completed ballots, and objecting to the acceptance of white proxies that were deposited after the proxy cut off time. He also objected to Victor Zaleschuk, Agrium chairman of the board, continuing to chair the meeting, asking that an independent chair be named. Moore further objected to the meeting continuing should a new chair not be named.
After conferring with counsel, Zaleshuck said he would proceed with the meeting.
After all candidates were nominated, Jana Managing Director Barry Rosenstein spoke and went over a litany of complaints about Agrium.
Rosenstein alleged that Jana had received 59 million votes for one or more of its nominees as of the vote deadline on Friday, April 5. However, he maintained that on April 7, three days after the deadline, Jana learned that enough of those votes were revoked to apparently change the outcome of the vote.
“We don’t know otherwise why the company would have started lobbying people after the deadline to change their votes,” Rosenstein said. “Usually, when an election is over and you have more votes than the other side, you have won. Not in this case, however. Apparently offering to pay $0.25 a share was not enough to lock it up. We intend to investigate this vote switching after the voting deadline was secretly extended and, of course, the vote buying and to pursue all appropriate remedies.”
Rosenstein reiterated that Jana had looked forward to working collaboratively with the board, but he said management took a decidedly different tack. “I congratulate you. Your board proved that if you play dirty enough, violate all precepts of corporate governance, fair play, ethical behavior, and democracy, you can still lose the campaign but then barely manufacture a victory after the voting is supposed to be over,” he said.
“You are a board that has condoned lying about the shareholder support you had; switching comparables that you came up with yourselves; hiring a mercenary banker who previously argued against your corporate structure and then argued for it when paid by you; buying back stock in an inflated price when you knew that an earnings miss was coming; permitting your management team to threaten shareholders that they would all quit if we got on the board, which is in violation of Canadian Securities Law regarding selective disclosure; attacking me personally as ‘lucky,’ ‘a pain in the a**,’ and a “New York hedge fund billionaire,’ and whatever that was meant to imply; changing your proxy material to falsely claim distribution experience on the board for members who never claimed it before; surreptitiously moving up the voting date by a month and then, when you didn’t like their results, lobbying shareholders to change their votes after Friday’s voting deadline passed; and bribing brokers and financial advisers for favorable votes. In an era of improved corporate governance, this is the worst example of entrenched, power hunger-at-any cost, behavior I’ve ever witnessed,” he continued.
“The good news is that this tainted vote isn’t the end of the story,” Rosenstein concluded. “We remain Agrium’s largest shareholder and you will find that we are just as vocal and active outside of a proxy contest as we are within it. We would not hesitate to speak up should Agrium go back to