Mike Wilson, Agrium CEOTODD KOROL
Jana Partners founder Barry Rosenstein is not about to de-escalate the war of words with fertilizer maker Agrium Inc., laying into the company once again for what he says is an antiquated attitude to corporate governance after the company's chief executive said directors who doubt strategy are not "typical" candidates.
Jana is Agrium's largest shareholder and wants to elect a slate of five new directors to the company's board to explore ideas such as splitting the company in two. Agrium has fought back, suggesting the idea is value-destroying, and the situation has developed into a full blown proxy battle.
The company started its own campaign to win over shareholders in earnest last week, and in an interview, chief executive officer Michael Wilson suggested that Agrium was not interested in Jana's director nominees because "it is not typical to bring someone on the board who tells you your strategy is flawed and indirectly tells you you're incompetent."
That comment drew the ire of Mr. Rosenstein.
"That attitude represents a total perversion of the proper relationship between a board and management," he said in an interview, adding that it is "such a throwback to the old days before shareholders really started focusing on good corporate governance, it's like watching an episode of Mad Men where all the doctors are smoking. CEOs don't get to pick or pre-screen new directors for ideological purity."
If Mr. Wilson didn't sound too interested in a compromise on directors who are palatable to both sides, neither did Mr. Rosenstein.
"We're set on having the most qualified people join the board and help Agrium reverse years of undervaluation, and who haven't promised Agrium's CEO they'll never disagree with him," he said.
Mr. Rosenstein said he is committed to electing his slate of directors, and then exploring the idea of splitting Agrium into two companies, one that would own fertilizer production assets and one that would own distribution and retailing businesses.
"So the first step would, in fact, be an unbiased review in which all sides, including those who favor the current structure, make the best arguments possible, and then the full board would make a decision. Our board members would be a minority, so any one who supports the split would still have to convince the ones who currently don't."
With a little more than three months to go before Agrium usually holds its annual general meeting in May, both sides are doing their best to sound confident that they will be victorious.
In Toronto last week, Mr. Wilson said that what he is hearing from investors now that he is out talking to them is that "hopefully Jana will go away now that you've defused those questions."
Mr. Rosenstein said Jana feels "great about where we are" and "the more time shareholders spend with our directors, the stronger our support becomes, and that's only going to continue."
(Boyd Erman is a Globe and Mail Capital Markets Reporter & Streetwise Columnist.)
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