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Alberta pension fund takes aim at Viterra board

TROY FLEECE/The Canadian Press/TROY FLEECE/The Canadian Press

A spat between Viterra Inc. and its largest shareholder has spilled out into the open, in a rare occurrence that highlights the growing muscle of Alberta's biggest pension fund.

Alberta Investment Management Corp., which owns more than 17 per cent of Viterra's shares, is demanding that the company find directors who can better guide the company's aspirations to make deals. AIMCo said in a statement Tuesday said the board lacks the "required skills and experience to meet the company's leadership needs as a growing international agribusiness," and that it tried to quietly settle its differences with Viterra over the past year and a half.

Public governance battles are unusual in Canada, although hefty pension funds are becoming more vocal when they are frustrated with a company's strategy and unable to resolve disputes behind closed doors. AIMCo has strongly supported Viterra in the past, financing the company's 2009 foray into Australia, one of its largest acquisitions.

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But now AIMCo wants directors with expertise in international finance and valuations, as well as the global agricultural industry, so they can help the company make acquisitions, Leo de Bever, AIMCo's chief executive officer, said in an interview.

Viterra, which is in a variety of food-related businesses such as selling seed and fertilizer, handling and processing grain, and providing animal feed, pitches itself as an ingredients company rather than a global agribusiness outfit. The company has publicly said it wants to further stretch its international reach. In 2010, for example, it struck a joint venture deal for a canola-crushing plant in China.

But its global growth plans, which helped Calgary-based Viterra differentiate itself from its predecessor, Saskatchewan Wheat Pool, are now making shareholders worried that the existing board will strike more big deals driven only by the desire to become a larger company.

"We'd like to see a better balance. Grow your dividend, and also make smart, accretive acquisitions," said Michael Simpson, a senior portfolio manager at Sentry Investments. "Perhaps look at smaller acquisitions as opposed to always going for the company-changer."

AIMCo, he believes, has the same desire. AIMCo's press release did not address whether it wanted spots on the board or mention Viterra's dividend policy.

Viterra started paying a 10-cent annual dividend in December, 2010 and Mr. Simpson wants more as cash flow grows.

"They've got a lot of room to raise it," he said. "Management is saying: 'We've got all these great growth projects.' We would say: 'Fine. Just grow in a disciplined manner, but also don't forget the shareholders who stuck with you."

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Mr. Simpson backs AIMCo's push to overhaul Viterra's board, with hopes that new faces come with experience in the "globally integrated food" business rather than those with more local expertise. AIMCo is not upset with Mayo Schmidt, Viterra's chief executive officer and the man who piloted Saskatchewan Wheat Pool as it dodged bankruptcy, Mr. Simpson said, noting he has not spoken with AIMCo representatives directly. Sentry owns roughly 1.18 per cent of Viterra.

Mr. de Bever, who came to AIMCo after years as chief financial investment officer at one of Australia's largest public sector pension funds, said he's already heard from one other institutional investor who agrees with what his fund is doing, and suspects support will be broad.

Two of Viterra's 13 board members – both with farming backgrounds – are not standing for re-election, the company said in a statement Friday, noting its annual meeting will be held in early March. Viterra is in the process of finding new board nominees who reflect its "commitment to ensure that the evolving needs of the company are addressed," the company said in its statement last week. Two "internationally recognized" search firms are now looking for new directors, and Viterra will continue to "seek input" from shareholders, it said.

AIMCo argues that Viterra put out this announcement "in response" to the pension fund's push, but the company's process will "delay substantive change and continue to deny shareholders any meaningful input."

In response to AIMCo's press release, Viterra issued a short statement Tuesday. "AIMCo's announcement is under consideration by Viterra's nominating and corporate governance committee," it said.

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About the Author

Carrie Tait joined the Globe in January, 2011, mainly reporting on energy from the Calgary bureau. Previously, she spent six years working for the National Post in both Calgary and Toronto. She has a master’s degree in journalism from the University of Western Ontario and a bachelor’s degree in political studies from the University of Saskatchewan. More

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