One of the Canadian business establishment's most seasoned advisers has become a lightning rod for shareholder criticism about boardroom independence at Maple Leaf Foods Inc.
Purdy Crawford, the 79-year-old lawyer and a leading director in the past at Canadian giants such as Inco Ltd. and Canadian National Railway Co., is the subject of a debate that has grown so fierce over his independence as the lead director of Maple Leaf Foods that the company took the rare step of amending a regulatory prospectus to defend him.
In response to what sources described as inquiries from the Toronto Stock Exchange and the Ontario Securities Commission, Maple Leaf Foods filed a new version Tuesday of a prospectus to address shareholder complaints about Mr. Crawford's close ties to the McCain family, which controls a third of the company's shares.
Mr. Crawford and Maple Leaf Foods chairman Wallace McCain have been close friends since they attended New Brunswick's Mount Allison University. Their families frequently socialize, attend the weddings of each other's children, and Mr. Crawford's daughter, Sarah Crawford, a former investment banker and corporate consultant, has been employed as a manager at Maple Leaf Foods since 2002.
A Maple Leaf spokeswoman said Ms. Crawford, a senior director of strategy, is a "highly valued employee" who has "risen quickly" through the organization.
The company's revised prospectus, which supports a secondary offering, details Mr. Crawford's role as a director at the McCain family's private holding company, McCain Capital Co. It also reveals for the first time that Mr. Crawford's law firm, Osler Hoskin & Harcourt LLP, is one of Maple Leaf's core outside advisers. The company said Mr. Crawford is no longer a partner or paid lawyer at a firm he has been associated with for decades. He continues to work out of Osler's Bay Street offices.
Maple Leaf said in its prospectus that it has concluded that the lawyer "has no direct or indirect material relationship that [could]. . . be reasonably expected to interfere with the exercise of Mr. Crawford's independent judgment."
The new disclosure about Mr. Crawford's links to the McCains comes days after activist investor West Face Capital Inc. requisitioned a meeting to hold a non-binding vote about reforming a board to address "serious concerns" about independence and governance practices at the company.
Mr. Crawford did not respond to requests for comment on Wednesday.
Sources said the Toronto hedge fund wrote a letter of concern to the TSE about Maple Leaf's disclosure of Mr. Crawford's links to the McCains. That letter prompted an inquiry to Maple Leaf from the OSC.
A spokeswoman for OSC said on Wednesday that the regulator "does not comment on prospectus filings or on the conversations that we may have had with issuers." A spokeswoman for Maple Leaf said the prospectus was changed because of "recent events, including recent media stories related to the independence of one of the company's directors."
Proxy battles are common in the United States and are becoming more frequent with smaller, publicly traded Canadian companies when ownership or governance issues emerge. It is almost unheard of, however, to see a major company and an establishment figure such as Mr. Crawford targeted in a shareholder scuffle.
Jim Hankinson, a Maple Leaf Foods director who leads a special committee of the board, delivered a strong defence of Mr. Crawford in an e-mail on Wednesday.
"Whether you look at Canadian securities law or simply the quality and integrity of the man - Purdy Crawford is as independent and as accomplished a director as you will find. He has led reform of securities regulations, industry standards and literally wrote the book on good governance. We are pleased to discuss governance with West Face or any of our shareholders, but we find these personal attacks on Mr. Crawford unjustified and distasteful," Mr. Hankinson wrote.
Tom Dea, a partner with West Face, said the fund's concerns about Mr. Crawford's role at Maple Leaf relate only to his deep links to the McCain family. "This is not a personal attack. We have the highest regard for Purdy Crawford and his contributions to Canadian society, but he is not an independent director by our standards."
The prospectus from Maple Leaf Foods supports a secondary offering, of 34 million shares, valued at $362.4-million, which are currently being sold by an underwriting group to investors. The shares were sold by Ontario Teachers' Pension Plan, which severed a 16-year relationship with McCain family earlier this years over disagreements about Maple Leaf's planned reorganization of some of its struggling businesses.
Maple Leaf Foods (MFI)
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