Welcome!

Microsoft Cloud Authors: Andreas Grabner, Stackify Blog, Liz McMillan, David H Deans, Automic Blog

News Feed Item

JANA Partners Issues Open Letter To Shareholders

Further Information Available at www.JANAAguAnalysis.com

NEW YORK, Feb. 20, 2013 /PRNewswire/ -- JANA Partners LLC today released the following open letter to shareholders of Agrium, Inc. ("Agrium") (TSX / NYSE: AGU).  Agrium announced at the end of the day last Friday that its Annual General Meeting of Shareholders will be held on April 9, 2013 and that shareholders of record on February 25, 2013 will be eligible to vote.

February 20, 2013

AN OPEN LETTER TO AGRIUM SHAREHOLDERS: 
Why We Said No to the Status Quo at Agrium, and Why You Should Too

Dear Fellow Agrium Inc. Shareholder,

We have invested more than $1 billion in Agrium, making us the largest shareholder with approximately 6.5% of its outstanding shares, because we believe Agrium can generate substantial additional upside for all shareholders by addressing 5 core issues:  Costs, Controls, Capital Allocation, Conglomerate Structure and Corporate Governance.  Agrium however refuses to fully address these issues, and has subverted traditional notions of good governance by fighting off our highly qualified independent nominees and choosing their own directors merely because we have questioned its performance and strategy.  We note that the market has had a swift and negative reaction to this refusal to engage, including a 7% share price decline last week after Agrium's new directors were announced and our rejection of its insufficient settlement offer.

Upending Notions of Good Corporate GovernanceAgrium has sought to turn traditional notions of board oversight of management upside down by making any questioning of management's prior performance or strategy a disqualification for board service.  When asked recently why Agrium refused to consider our candidates, Agrium's CEO responded that "It is not typical to bring someone on the board who tells you your strategy is flawed and indirectly tells you you're incompetent." (The Globe & Mail, Feb. 4, 2013).  JANA has of course never called management "incompetent."  We have simply identified areas of substantial opportunity and proposed qualified nominees to help explore them.  This same fortress mentality was on display in our recent settlement discussions, with Agrium demanding at one point that we drop all of our issues in exchange for merely proceeding with talks, and refusing to even speak to our nominees. 

This thin-skinned and insular attitude leads us to conclude that Agrium's new directors have been pre-screened to ensure compliance with the status quo.  We further note that Agrium did not cast a very wide net to locate new board appointee Mayo Schmidt, given that Viterra's distribution business was acquired by Agrium in a transaction in which he earned over C$30MM.  We also note that our board nominees stand to benefit only to the extent that all shareholders benefit and each meets the definition of "independence" under the CBCA, NYSE rules, and Agrium's own governance guidelines.

Just last Friday, Agrium doubled-down on its approach, shifting up the usual date of its annual meeting by over a month in an apparent attempt to cut short this debate.  While we are confident that this move is too little, too late, it further paints a picture of serious governance issues at Agrium.  As one analyst put it, "Friday after the close at the start of a holiday weekend isn't typically when company Boards disclose things they are proud of, but you can't fault the Agrium Board for consistency. An abrupt shift in the dates for the shareowner meeting looks designed to perpetuate the lack of transparency and accountability that seems to be the (very) unexpected legacy of CEO Mike Wilson. Investors who have been supportive of Agrium thus far will have to think hard about whether this is the sort of behavior they want to encourage elsewhere, when they cast their ballots in this accelerated election." (Credit Agricole / CLSA, Feb. 19, 2013)

Refusal to Address Core IssuesWhen Agrium approached us seeking a settlement, we made clear that for any settlement to occur the board would need to commit to conducting a full review of the branch footprint of its distribution business ("Retail") and corporate overhead (Costs) and a full review of Retail senior management performance objectives (Controls), to communicate a targeted dividend payout ratio or some other mechanism to clarify ongoing capital return plans (Capital Allocation) and to retain a new investment bank to perform a review of Agrium's structure (Conglomerate Structure), in addition to adding highly-qualified and independent new directors rather than fighting off such change (Corporate Governance).  Agrium however refused to commit to even the mildest versions of these concepts.

Appointing New Directors Who Lack Relevant ExperienceNeither of Agrium's chosen new directors addresses the board's lack of distribution experience, which is of crucial importance given the size of Agrium's Retail business. 

  • Mayo SchmidtWhile Mr. Schmidt served as CEO of Viterra Inc. before it was acquired by Glencore and Agrium, Viterra's distribution business accounted for less than 15% of EBITDA and served primarily to advance its grain handling business. Agrium has also noted significant opportunities for improvement at Viterra's distribution business, which calls into question Mr. Schmidt's abilities in areas like cost management.  We also note that like Agrium, Viterra struggled in basic areas of oversight and performance including Costs, given Viterra's consistently high annual growth rate in corporate overhead, and Capital Allocation, given that Viterra executed no share repurchases (instead issuing over $2 billion of equity) and initiated a small dividend only after coming under pressure from shareholders to do so.
  • David EverittMr. Everitt ran a unit at Deere & Co. that manufactured and sold capital equipment to a separate independently-owned and operated dealer network. While he has experience in agriculture and with manufacturing and supply chain issues, he brings no experience in managing true "breaking bulk" distribution of primarily third party manufactured products, which is a crucial gap given that Agrium's Retail business purchases the vast majority of its products from third party suppliers and breaks bulk to distribute to farmer customers.

By contrast, 3 of our 5 nominees bring more than 75 years of combined experience creating substantial value in true "breaking bulk" distribution and excellent track records of deploying capital with a true owner orientation.

Questions for Every Shareholder.   

  • Wouldn't a board more concerned with good governance and continuous improvement than avoiding criticism have agreed to merely fully explore the issues we set forth above, given the billions in potential value creation?
  • Why would the board resist adding a minority of new directors who actually have the experience to ask the right questions about Retail's operations and strategy?
  • Why would a board that has spent $4 billion on Retail acquisitions that have failed to meet Agrium's minimum return hurdle and which failed for years to engage in significant shareholder return of capital until pressured to do so refuse to simply clarify its ongoing capital return plans?
  • Why would a board that has overseen a 14% annual growth rate in corporate overhead, has a Retail footprint which by Agrium's own admission and measurement standards has a glaring degree of duplication, and has generated negative operating leverage refuse to consider seriously examining its costs?
  • If Agrium's conglomerate structure truly creates more value than a separation, why is the board so resistant to an independent and fair review, particularly given the flaws in its initial review including manipulating trading comparables and hiring advisors who once argued against Agrium's structure to now defend it, and given that our nominees will constitute only a minority of the board once elected?
  • Why would a board that has consistently set compensation targets for Retail management that prioritize growth through acquisitions over profitability refuse to an enhanced review of these compensation targets and objectives?
  • Why would a board that has overseen a litany of corporate governance failings including talking down its own value to avoid a debate, botching a significant share repurchase, accelerating its annual meeting date and more resist adding independent and shareholder-oriented new directors?

We believe the board should be saying yes to these opportunities to unlock Agrium's full value creation potential, rather than wasting substantial shareholder money fighting them off, and we remain confident that once our highly qualified and shareholder-focused director candidates are elected, the board will do so.

Sincerely,

JANA Partners LLC

Information in Support of Public Broadcast Solicitation

JANA is relying on the exemption under section 9.2(4) of National Instrument 51-102 – Continuous Disclosure Obligations to make this public broadcast solicitation.  The following information is provided in accordance with corporate and securities laws applicable to public broadcast solicitations.

This solicitation is being made by JANA, and not by or on behalf of the management of Agrium.

The address of Agrium is 13131 Lake Fraser Drive S.E., Calgary, Alberta T2J 7E8.

JANA has filed an information circular containing the information required by Form 51-102F5 – Information Circular in respect of its proposed nominees, which is available on Agrium's company profile on SEDAR at www.sedar.com and at www.JANAAguAnalysis.com.

Proxies for the Agrium shareholders' meeting may be solicited by mail, telephone, email or other electronic means as well as by newspaper or other media advertising, and in person by managers, directors, officers and employees of JANA, who will not be specifically remunerated therefor.  In addition, JANA may solicit proxies in reliance upon the public broadcast exemption to the solicitation requirements under applicable Canadian corporate and securities laws, conveyed by way of public broadcast, including through press releases, speeches or publications, and by any other manner permitted under applicable Canadian laws.  JANA may engage the services of one or more agents and authorize other persons to assist it in soliciting proxies on behalf of JANA.  All costs incurred for the solicitation will be borne by JANA.

JANA has entered into agreements with Kingsdale Shareholder Services Inc. ("Kingsdale") and The Laurel Hill Advisory Group Company ("Laurel Hill") pursuant to which Kingsdale and Laurel Hill have agreed to assist JANA in soliciting shareholders should JANA commence a formal solicitation of proxies.  Kingsdale's responsibilities will principally include advising JANA on governance best practices, where applicable, liaising with proxy advisory firms, developing and implementing shareholder communication and engagement strategies, and advising with respect to meeting and proxy protocol. Laurel Hill will be principally responsible for the solicitation of retail shareholders and other strategic advice. Pursuant to the agreement with Kingsdale, for its solicitation services, Kingsdale would receive a fee in the range of $125,000 to $250,000, plus disbursements and a telephone call fee.  In addition, Kingsdale may be entitled to a success fee on the successful completion of JANA's solicitation, as determined by JANA in consultation with Kingsdale. Kingsdale will also receive a separate fee for its other services. Pursuant to the agreement with Laurel Hill, Laurel Hill would receive a fee of up to $100,000, plus disbursements and a telephone call fee. In addition, Laurel Hill will be entitled to a success fee of $100,000 on the successful completion of JANA's solicitation. All costs incurred for the solicitation will be borne by JANA.

JANA is not requesting that Agrium shareholders submit a proxy at this time.  Once JANA has commenced a formal solicitation of proxies, a registered holder of common shares of Agrium that gives a proxy may revoke it: (a) by completing and signing a valid proxy bearing a later date and returning it in accordance with the instructions contained in the form of proxy to be provided by JANA, or as otherwise provided in the final proxy circular, once made available to shareholders; (b) by depositing an instrument in writing executed by the shareholder or by the shareholder's attorney authorized in writing, as the case may be: (i) at the registered office of Agrium at any time up to and including the last business day preceding the day the meeting of Agrium shareholders or any adjournment or postponement of the meeting is to be held, or (ii) with the chairman of the meeting prior to its commencement on the day of the meeting or any adjournment or postponement of the meeting; or (c) in any other manner permitted by law.  A non-registered holder of common shares of Agrium will be entitled to revoke a form of proxy or voting instruction form given to an intermediary at any time by written notice to the intermediary in accordance with the instructions given to the non-registered holder by its intermediary.

To the knowledge of JANA, neither JANA nor any of its managers, directors or officers, or any associates or affiliates of the foregoing, nor any of JANA's nominees, or their respective associates or affiliates, has: (i) any material interest, direct or indirect, in any transaction since the beginning of Agrium's most recently completed financial year or in any proposed transaction that has materially affected or would materially affect Agrium or any of its subsidiaries; or (ii) any material interest, direct or indirect, by way of beneficial ownership of securities or otherwise, in any matter currently known to be acted upon at the meeting of Agrium shareholders other than the election of directors.

SOURCE Jana Partners LLC

More Stories By PR Newswire

Copyright © 2007 PR Newswire. All rights reserved. Republication or redistribution of PRNewswire content is expressly prohibited without the prior written consent of PRNewswire. PRNewswire shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.

@ThingsExpo Stories
In his keynote at @ThingsExpo, Chris Matthieu, Director of IoT Engineering at Citrix and co-founder and CTO of Octoblu, focused on building an IoT platform and company. He provided a behind-the-scenes look at Octoblu’s platform, business, and pivots along the way (including the Citrix acquisition of Octoblu).
Multiple data types are pouring into IoT deployments. Data is coming in small packages as well as enormous files and data streams of many sizes. Widespread use of mobile devices adds to the total. In this power panel at @ThingsExpo, moderated by Conference Chair Roger Strukhoff, panelists will look at the tools and environments that are being put to use in IoT deployments, as well as the team skills a modern enterprise IT shop needs to keep things running, get a handle on all this data, and deli...
In his opening keynote at 20th Cloud Expo, Michael Maximilien, Research Scientist, Architect, and Engineer at IBM, will motivate why realizing the full potential of the cloud and social data requires artificial intelligence. By mixing Cloud Foundry and the rich set of Watson services, IBM's Bluemix is the best cloud operating system for enterprises today, providing rapid development and deployment of applications that can take advantage of the rich catalog of Watson services to help drive insigh...
DevOps is often described as a combination of technology and culture. Without both, DevOps isn't complete. However, applying the culture to outdated technology is a recipe for disaster; as response times grow and connections between teams are delayed by technology, the culture will die. A Nutanix Enterprise Cloud has many benefits that provide the needed base for a true DevOps paradigm.
With major technology companies and startups seriously embracing Cloud strategies, now is the perfect time to attend @CloudExpo | @ThingsExpo, June 6-8, 2017, at the Javits Center in New York City, NY and October 31 - November 2, 2017, Santa Clara Convention Center, CA. Learn what is going on, contribute to the discussions, and ensure that your enterprise is on the right path to Digital Transformation.
Five years ago development was seen as a dead-end career, now it’s anything but – with an explosion in mobile and IoT initiatives increasing the demand for skilled engineers. But apart from having a ready supply of great coders, what constitutes true ‘DevOps Royalty’? It’ll be the ability to craft resilient architectures, supportability, security everywhere across the software lifecycle. In his keynote at @DevOpsSummit at 20th Cloud Expo, Jeffrey Scheaffer, GM and SVP, Continuous Delivery Busine...
SYS-CON Events announced today that WineSOFT will exhibit at SYS-CON's 20th International Cloud Expo®, which will take place on June 6-8, 2017, at the Javits Center in New York City, NY. Based in Seoul and Irvine, WineSOFT is an innovative software house focusing on internet infrastructure solutions. The venture started as a bootstrap start-up in 2010 by focusing on making the internet faster and more powerful. WineSOFT’s knowledge is based on the expertise of TCP/IP, VPN, SSL, peer-to-peer, mob...
SYS-CON Events announced today that EARP Integration will exhibit at SYS-CON's 20th International Cloud Expo®, which will take place on June 6-8, 2017, at the Javits Center in New York City, NY. EARP Integration is a passionate software house. Since its inception in 2009 the company successfully delivers smart solutions for cities and factories that start their digital transformation. EARP provides bespoke solutions like, for example, advanced enterprise portals, business intelligence systems an...
SYS-CON Events announced today that delaPlex will exhibit at SYS-CON's @CloudExpo, which will take place on June 6-8, 2017, at the Javits Center in New York City, NY. delaPlex pioneered Software Development as a Service (SDaaS), which provides scalable resources to build, test, and deploy software. It’s a fast and more reliable way to develop a new product or expand your in-house team.
SYS-CON Events announced today that Carbonite will exhibit at SYS-CON's 20th International Cloud Expo®, which will take place on June 6-8, 2017, at the Javits Center in New York City, NY. Carbonite protects your entire IT footprint with the right level of protection for each workload, ensuring lower costs and dependable solutions with DoubleTake and Evault.
SYS-CON Events announced today that Progress, a global leader in application development, has been named “Bronze Sponsor” of SYS-CON's 20th International Cloud Expo®, which will take place on June 6-8, 2017, at the Javits Center in New York City, NY. Enterprises today are rapidly adopting the cloud, while continuing to retain business-critical/sensitive data inside the firewall. This is creating two separate data silos – one inside the firewall and the other outside the firewall. Cloud ISVs oft...
SYS-CON Events announced today that Outscale will exhibit at SYS-CON's 20th International Cloud Expo®, which will take place on June 6-8, 2017, at the Javits Center in New York City, NY. Outscale's technology makes an automated and adaptable Cloud available to businesses, supporting them in the most complex IT projects while controlling their operational aspects. You boost your IT infrastructure's reactivity, with request responses that only take a few seconds.
As cloud adoption continues to transform business, today's global enterprises are challenged with managing a growing amount of information living outside of the data center. The rapid adoption of IoT and increasingly mobile workforce are exacerbating the problem. Ensuring secure data sharing and efficient backup poses capacity and bandwidth considerations as well as policy and regulatory compliance issues.
SYS-CON Events announced today that Cloud Academy will exhibit at SYS-CON's 20th International Cloud Expo®, which will take place on June 6-8, 2017, at the Javits Center in New York City, NY. Cloud Academy is the industry’s most innovative, vendor-neutral cloud technology training platform. Cloud Academy provides continuous learning solutions for individuals and enterprise teams for Amazon Web Services, Microsoft Azure, Google Cloud Platform, and the most popular cloud computing technologies. Ge...
DevOps at Cloud Expo – being held October 31 - November 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA – announces that its Call for Papers is open. Born out of proven success in agile development, cloud computing, and process automation, DevOps is a macro trend you cannot afford to miss. From showcase success stories from early adopters and web-scale businesses, DevOps is expanding to organizations of all sizes, including the world's largest enterprises – and delivering real r...
The 21st International Cloud Expo has announced that its Call for Papers is open. Cloud Expo, to be held October 31 - November 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA, brings together Cloud Computing, Big Data, Internet of Things, DevOps, Digital Transformation, Machine Learning and WebRTC to one location. With cloud computing driving a higher percentage of enterprise IT budgets every year, it becomes increasingly important to plant your flag in this fast-expanding busin...
With major technology companies and startups seriously embracing Cloud strategies, now is the perfect time to attend @CloudExpo | @ThingsExpo, June 6-8, 2017, at the Javits Center in New York City, NY and October 31 - November 2, 2017, Santa Clara Convention Center, CA. Learn what is going on, contribute to the discussions, and ensure that your enterprise is on the right path to Digital Transformation.
SYS-CON Events announced today that Interoute has been named “Bronze Sponsor” of SYS-CON's 20th International Cloud Expo®, which will take place on June 6-8, 2017, at the Javits Center in New York City, NY. Interoute is the owner operator of Europe's largest network and a global cloud services platform, which encompasses over 70,000 km of lit fiber, 15 data centers, 17 virtual data centers and 33 colocation centers, with connections to 195 additional partner data centers. Our full-service Unifie...
SYS-CON Events announced today that Progress, a global leader in application development, has been named “Bronze Sponsor” of SYS-CON's 20th International Cloud Expo®, which will take place on June 6-8, 2017, at the Javits Center in New York City, NY. Enterprises today are rapidly adopting the cloud, while continuing to retain business-critical/sensitive data inside the firewall. This is creating two separate data silos – one inside the firewall and the other outside the firewall. Cloud ISVs ofte...
SYS-CON Events announced today that delaPlex will exhibit at SYS-CON's @ThingsExpo, which will take place on June 6-8, 2017, at the Javits Center in New York City, NY. delaPlex pioneered Software Development as a Service (SDaaS), which provides scalable resources to build, test, and deploy software. It’s a fast and more reliable way to develop a new product or expand your in-house team.