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Agrium Inc. annual general meeting in Calgary, May 11, 2012. The five men that activist hedge fund Jana Partners LLC wants installed on Agrium Inc.’s board of directors are dismissing claims that their independence would be compromised by so-called ‘golden leash’ payments.

Todd Korol/Reuters

The chaotic vote for the board at Agrium Inc. is a clear argument for universal ballots in proxy fights.

In the fight for representation in the boardroom at the Calgary-based company, dissident shareholder Jana Partners has put forward one ballot, and the company another.

Each ballot lists the nominees favoured by the side mailing it. By Tuesday's annual meeting, shareholders have to choose on which ballot to vote.

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It's the corporate equivalent of each political party handing out their own ballot with only the names they want on it.

Agrium's ballot listed the 12 incumbent directors. Jana's listed seven incumbents that Jana could live with, plus five other nominees.

The problem arises if shareholders prefer some combination of directors other than the two on offer. There's no way to vote for, say, 10 incumbents and two Jana nominees.

As this previous post explained, that leads to some interesting twists and turns.

From a tactical point of view, the sides may prefer it that way. But it's not optimal for shareholders wishing to choose the outcome they prefer.

That's why a universal ballot that lists all the nominees on each side is the right way to go. It's what the sides in the acrimonious Canadian Pacific Ltd. proxy battle went with, and it was a boon to shareholders then.

Companies and dissidents don't agree on much, but since both sides always argue that they are putting shareholders first, it's hard to argue against a universal ballot.

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(Boyd Erman is a Globe and Mail Reporter & Streetwise Columnist.)

Return to Streetwise home page.

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