Australian Wool Innovation chairman Wal Merriman won’t voluntarily stand down at the next Annual General Meeting but will leave his fate in the hands of shareholders.
The longstanding chair and NSW woolgrower said having a mix of directors on the AWI board, including some with longer tenure and a “deep understanding of the entity and its business” was for the betterment of AWI shareholders.
“We are acutely aware of not letting history repeat itself by ensuring that we have a board that understands and is engaged in the wool business and is able to provide leadership to the industry,” Mr Merriman said.
“The first AWI board consisted of professionals outside the industry including doctors, a scientist, accountants and lawyers, all good people, but no woolgrowers.
“Over time these people were voted off by the shareholders to the point of the present board we have today.
“The current board has been voted on over the last 15 years by free and transparent elections, conducted by the company in line with corporations law.”
Mr Merriman made the comments to Fairfax Agricultural Media in his first interview since Federal Agriculture Minister David Littleproud handed down the long awaited review into the performance and governance of AWI last month.
The findings included 82 recommendations including moving to a skills-based board and restricting the terms for board members to 10 years.
Mr Merriman has been a board member since 2004 and chairman since 2008.
When the findings were released, AWI CEO Stuart McCullough said the majority of the recommendations could be actioned but observed that there were certain items that would require constitutional change.
Mr Merriman this week said there were also a number of key recommendations that could impact shareholders rights – a view he said he had shared with Minister Littleproud.
The chairman also said the review imposed a different view of independence when compared to the ASX guidelines under which AWI operates.
“The reviewer’s treatment of ‘independence’ differs from accepted norms and conventions of governance for companies,” Mr Merriman said.
In AWI’s case, the independence of all directors, including any with more than 10 years’ service, is tested annually against the factors relevant to assessing the independence of a director set out in the ASX Corporate Governance Principles.
“The AWI board members are all deemed to be independent when tested against those factors,” Mr Merriman said.
“Secondly, the recommendations on directing the chair and board members’ proxies to the BNC candidates and other recommendations in this area will be presented as resolutions for shareholders to vote on at this year’s AGM.”
Another such recommendation was regarding the 10-year cap on directors serving on the board with a two-year rollover period. This will also go to the shareholders for a resolution, Mr Merriman said.
“The board, with all the good will in the world, cannot grant some of these recommendations without seeking the approval of our shareholders,” he said.
The board, with all the good will in the world, cannot grant some of these recommendations without seeking the approval of our shareholders.
“These are recommendations that affect shareholders rights and the board has a fiduciary duty to their shareholders and must present them at an AGM for change.”
Mr Merriman said the current board had overseen the new product development and marketing of the company.
“These marketing activities have significantly contributed to the increase in price from 820 cents to 2000 plus cents per kilogram now giving us a $4.4 billion industry,” Mr Merriman said.
All this has been done with a rather static supply base of approximately 350 million kilograms since 2009. In the last two years there has been a supply increase of five per cent per year and a price increase of some 50 per cent.