Agrium Inc. has defeated a boardroom challenge from dissident shareholder Jana Partners LLC, with investors choosing to back the company's board slate after an acrimonious months-long campaign that ended in a flurry of accusations of unfair play.
Agrium chief executive officer Mike Wilson said he regretted that the process took 10 months to come to a resolution but he's glad the proxy battle - which pitted the Calgary-based agriculture and fertilizer giant against a U.S. hedge fund investor that wanted to install its own board members and break up the business - is in the rear-view mirror.
While Jana founder Barry Rosenstein pledged Tuesday that it wasn't the end of the heated dispute, Mr. Wilson said the company can once again focus on operations and growth.
"I don't know why they chose us. They obviously chose the wrong target," Mr. Wilson said of the New York-based hedge fund Jana Partners, Agrium's largest shareholder.
The long-time Agrium CEO suggested that, combined with the experience of Canadian Pacific Railway Ltd., when Pershing Square Capital Management successfully launched a fight to change the strategy and management at that Canadian institution, CEOs need to be on guard.
"It's a tough process. And unfortunately, a lot of CEOS are going through it or are going to go through it," Mr. Wilson told reporters following the company's annual general meeting in Calgary on Tuesday.
"Based on what I'm seeing, this is the new wave - people who are looking for short-term gain, versus long-term gain."
At the meeting, Mr. Rosenstein said he thought he had enough votes as of Friday's voting deadline to install two directors on Agrium's 12-person board, but accused the company of successfully lobbying after the cutoff to have votes for Jana directors revoked. Still, Mr. Rosenstein said he would remain a vocal shareholder of Agrium, vowing "this tainted vote is not the end of the story."
As late as Monday, Jana said it believed it had enough votes to put two directors on the Agrium board. That was short of the five that Jana had sought, but would still have represented a significant victory over a company that early on had largely dismissed any chance of Jana making inroads.
"I congratulate you," Mr. Rosenstein said calmly to Agrium executives from the floor of the annual general meeting. "You are a board that proved that if you play dirty enough, violate all precepts of good corporate governance, fair play, ethical behaviour and democracy, you can still lose the campaign but then barely manufacture a victory after the voting is supposed to be over."
After a delay in the count on Tuesday, Agrium listed the numbers of votes for each of its directors and other candidates. Mr. Rosenstein and David Bullock, two Jana nominees, received 53 million and 46 million votes, respectively, fewer than the lowest total for an Agrium nominee, at 59 million.
Even before the meeting formally began, Alex Moore, counsel for Jana, raised a number of objections, including that Agrium paid Canadian brokers fees of 25 cents a share if their retail clients voted for management's nominees. Mr. Moore said this "fundamentally undermines the fairness of the election."
Walied Soliman - a lawyer acting on Agrium's behalf - said the company played "fair and square." Jana appeared on the scene last summer, having amassed a stake that made it Agrium's biggest shareholder. Jana accused Agrium of being poorly run, and suggested the company look at splitting its fertilizer production operations from its farm products retail unit. The company shot back that it had no intention of doing so. Agrium appeared confident that it would have no trouble fending off Jana, and said it had a strong track record and backing from many shareholders.
Over the following months, the company and Jana took turns trading accusations in an increasingly bitter fight that culminated in Tuesday's meeting. Jana's long campaign built support to the point where the vote could have been very close.
Even so, it's clear that Jana did effect change at Agrium. The company began raising its dividend more quickly than in the past. While Agrium denied that the bigger payouts were related to Jana, not all observers bought that line. Even proxy advisory service Glass Lewis, which backed Agrium's slate, said that the suggestion that it was not a reaction to Jana was "disingenuous."
Robert Schulz, a strategic management professor at University of Calgary's Haskayne School of Business, said he believes investors will sit tight. "The real question is what is Jana going to do with their shares," Prof. Schulz said.
Agrium will now have to deal with a large shareholder that remains outspokenly critical. Mr. Rosenstein said he has no intention of giving up, and plans to "investigate the vote changes after the voting deadline and of course the vote buying, and to pursue all appropriate remedies."
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