Agrium Shows Morals Are Optional

Who thought that Canadian equity markets operated with shareholder protections that would bring even a developing country’s regulator to shame? Here’s the story: Agrium (AGU), a poorly managed producer and distributor of agricultural products in Calgary, is engaged in a proxy fight with Jana Partners, an activist investor with some very good ideas on how AGU could improve its performance. Jana has proposed its own slate of five nominees for the Board of Directors, people who it believes will improve the Board’s ability to run its retail business. AGU hasn’t welcomed Jana’s interest, and in the upcoming vote it transpires that AGU will be paying Canadian financial advisers who vote their clients’ shares in favor of AGU’s nominees.

It’d be bad enough to pay individual shareholders to vote a certain way, but paying their advisers? Are the Canadian managers of client assets really up for sale? Are they really the world’s oldest profession?

It’s a quite extraordinary set of circumstances, surely not a way of doing business that Canadian regulators can defend. We are invested in AGU. Jana’s interest piqued ours. AGU’s vote-buying makes it a more attractive investment, since it confirms the poor judgment of current management. Their continued tenure is surely now more tenuous.

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