Following yesterday's notice from JANA
Partners that Agrium Inc. ("Agrium") AGU is using shareholder
money to pay brokers and investment advisers for votes for Agrium's directors,
the response has been swift and decisive.
o "Agrium's broker fee fails to pass the smell test." – The Globe & Mail,
April 2, 2013
o "25 cents? That's the going rate it seems to bribe shareholders … There
just seems to be something sleazy about all of this." – BNN Business News
Network, April 1, 2013
o "I don't know if there's a clearer definition of buying a vote out there
than what they are doing. Paying 25 cents for a yes vote." - BNN Business
News Network, April 1, 2013
While 24 hours later Agrium has given no justification or released any of the
details of its vote buying plan, which is unprecedented, it has made a number
of false statements in its defense.
o "This is common in Canada." – False. This tactic is sometimes used in M&A
or other transactions that have been approved by an unconflicted board,
not where a board is trying to influence the outcome of its own election.
We are aware of this happening in a contested board election exactly one
other time, and in that case the full details of such arrangement were
publicly disclosed. Something that has happened once is not common, and
no matter how many times something improper happens, it is still improper.
o "This is no different than paying a proxy solicitor" – False. Proxy
solicitors identify themselves as working for the company and have no
relationship with the shareholder. In this case there has been no
disclosure that brokers and financial advisors, who clients trust to give
objective advice, are being paid for Agrium votes. Apparently Agrium had
no plans to disclose these payments, thus deliberately misleading their
shareholders.
o "JANA signaled it had similar plans, and we did not want to be at a
disadvantage." – False. In fact it is entirely the other way around as
Agrium first disclosed this as a possibility in its March 4^th proxy
circular (using vague terms suggesting that it "may" employ this tactic
without disclosing any details). Our circular, reserving the right to do
this, was filed on March 7^th. In any event, unlike Agrium, we never
pursued this option.
o "We are just paying to reach hard to reach retail shareholders." – False.
Agrium is not paying to "reach" shareholders. They are buying their vote
for 25 cents a share, which could add up to more than $10 million dollars,
making it one of the biggest expenses of the campaign for Agrium and a
complete misuse of shareholder money. Agrium is also only paying for
votes if its entire slate of director nominees is elected.
o "We are confident that we have shareholder support." – We leave it to
shareholders to determine whether this is a credible statement in light of
yesterday's revelations.
JANA today also called on all investment advisers and brokers who are
approached by Agrium with its vote buying offer to consider whether, even if
such tactics are legal in Canada (which we believe is questionable, and they
are not legal in the US), they are consistent with the trust that their
clients place in them.
JANA also directed Canadian investment advisors and brokers to review the
exemption from the Canadian proxy solicitation rules in National Instrument
51-102 which permits them to provide proxy voting advice to their clients.
That exemption clearly requires them to disclose "any significant
relationship" with Agrium and one of the conditions to the exemption clearly
prohibits them from receiving "any special commission or remuneration for
giving the proxy voting advice" other than from shareholders.
While Agrium may attempt to convince investment advisors and brokers that they
can still justify participating in an undisclosed vote buying program based on
technicalities, we ask every single one of them who is approached by Agrium to
ask themselves this question: "What would my clients, who put their trust in
me, think of that?" We believe the answer is clear, and that investment
advisors and brokers should reject Agrium's vote buying scheme.
VOTE THE BLUE PROXY OR VIF "FOR" UNLOCKING AGRIUM'S SUBSTANTIAL VALUE CREATION
POTENTIAL
Even if you have previously submitted a white proxy or given voting
instructions in support of the incumbent management nominees, you may still
change your vote and support JANA's recommendations by completing and
submitting a BLUE form of proxy or giving voting instructions in accordance
with the BLUE voting instruction form.
For questions or assistance, please contact Kingsdale Shareholder Services
Inc., at 1-866-581- 1514 toll-free in North America, or 1-416-867-2272 outside
of North America, or by email at contactus@kingsdaleshareholder.com. To keep
current with further developments and information about voting your Shares,
visit www.JanaAGUAnalysis.com.
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