Viterra Inc. has moved into slight gains for the day, after its upbraiding from its largest shareholder, Alberta Investment Management Corp. on Tuesday morning. In a blistering statement, AIMCo said that it has become fed up with the grain handler's response to its concerns about corporate governance:
"Alberta Investment Management Corporation will not accept Viterra's vague plans for board renewal, further platitudes about seeking shareholder input, or closed door processes on important governance issues. We have been a shareholder for over two years and we are disappointed with the board's unwillingness to accept meaningful shareholder input on these important concerns."
It goes on to say that after 18 months of dialogue with the company, it "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."
AIMCo owns a 17 per cent slice of Viterra, so its concerns certainly mean something and are unlikely to be ignored. But if the money manager's concerns sound a bit vague, let's take a closer look at the real problem with Viterra: The share price and underlying fundamentals don't exactly quicken the pulse.
The shares are back to levels seen in 2007. Okay, the rest of the market hasn't done much over these four years either, but keep in mind that Viterra is in the global food business – a sector that should be seeing some interest. Meanwhile, earnings on a per-share business have flat-lined over the past six years, even as revenues have grown 10-fold. Return on equity: a mere 4 per cent.
AIMCo is trying to stir things up at the board. But no doubt it has its eye on other matters as well – and investors might be starting to get on board what might be an interesting shakeup.
Here's the full text of AIMC's statement:
"Alberta Investment Management Corporation will not accept Viterra's vague plans for board renewal, further platitudes about seeking shareholder input, or closed door processes on important governance issues. We have been a shareholder for over two years and we are disappointed with the board's unwillingness to accept meaningful shareholder input on these important concerns. After eighteen months of dialogue, AIMCo does not believe the current Viterra directors are prepared to enact meaningful change for the benefit of all stakeholders. Among these concerns, 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. AIMCo is a proven long-term investor that strongly believes in the benefits of corporate governance and has a solid reputation as a trusted partner that works with companies to build successful businesses. AIMCo remains committed to Viterra's long-term success."
David Berman