Canada’s largest grain company faces a shareholder challenge related to internal governance issues and the selection of new board members.
Viterra’s largest shareholder, the Alberta Investment Management Corp. (AIMCo), criticized the company’s leadership last week, suggesting its plans to replace two outgoing board members are vague, insufficient and unresponsive to shareholder concerns.
AIMCo, which owns 17 percent of Viterra’s publicly traded shares, played a key role in financing the company’s acquisition of ABB Grain in September 2009, a deal that was worth an estimated $1.4 billion.
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“(AIMCo) will not accept Viterra’s vague plans for board renewal, further platitudes about seeking shareholder input or closed door processes on important governance issues,” AIMCo said in a written statement dated Nov. 1.
“AIMCo does not believe the current Viterra board has the required skills or expertise to meet the company’s leadership needs as a growing international agribusiness.”
The investment company said it remains committed to Viterra’s long-term success.
Viterra’s share price rallied last fall and into the winter, peaking at more than $12 per share this spring, but has since drifted lower to a range between $9 and $11.
The AIMCo statement brings to light a lingering disagreement that has been brewing behind closed doors for some time.
In its Nov. 1 statement, AIMCo officials said they have identified a number of governance changes that are critical to Viterra’s long-term success.
The investment company said it has been trying to engage Viterra’s board for the past 18 months in meaningful discussions about the process used to select new board members.
AIMCo wants Viterra to adopt a process that would allow shareholders more input in making board selections.
Viterra has said an internal committee will work with two international search firms to identify suitable candidates for the board vacancies. It would then make a list of potential replacements available to shareholders at the company’s annual meeting in Calgary next March.
The company has confirmed that Viterra directors Vic Bruce and Paul Daniel will not stand for re-election at that meeting.
AIMCo suggested the company’s plan to identify a slate of potential replacements minimizes shareholder input and will result “in further entrenchment of an unresponsive and unaligned board that may limit the company’s long-term potential.… The only acceptable course of action would be for Viterra to work collaboratively with AIMCo in a meaningful way to identify appropriate directors for nomination.”
In a written response dated Nov. 2, Viterra said it is committed to ensuring its board comprises the best directors it can identify with appropriate skill sets.
“At this time, Viterra will not respond to statements made in AIMCo’s press release,” the company said.
“Since AIMCo first raised the issues in February 2011, Viterra has discussed with AIMCo views about board composition and has invited AIMCo to re-engage in such dialogue in a constructive manner.”
AIMCo, an independent investment arm of the Alberta government, manages more than $70 billion worth of assets through public sector pensions, endowments and other government-owned funds.
