On this point, Aimco, which is one of Agrium's largest shareholders and one of the largest investment funds in Canada, wrote: "We struggle with a governance model where JANA Partner's dissident nominees are compensated in a different manner than other directors. This has negative effects on the board: lack of independence, fragmentation, and reduced efficacy. JANA's plan is misaligned with the interests of long-term shareholders."
ISS' decision fails to properly consider the following facts:
-- Agrium's integrated strategy has delivered a 467% shareholder return since it was initiated in late 2005-- Agrium is one of the best performing stocks in North America over the past eight years, and on any accepted basis its 1-, 3-, and 5-year share price performance is very strong-- Agrium's Board has an excellent governance track record, including a robust and ongoing board renewal program that since 2005 has added the fresh perspectives of seven of the current 13 highly-qualified Board members-- Agrium delivered record earnings and strong cash flow in 2011-- Agrium delivered record earnings and cash flow in 2012-- Agrium has increased its dividend 18-fold since 2010, in line with increased earnings and cash flow and consistent with the actions of Agrium's competitors-- Agrium, not JANA, structured its pending acquisition of the Agri Products business from Glencore, allowing Agrium to return C$900 million of excess proceeds directly to shareholders through a share repurchase in October 2012-- By endorsing JANA's analysis and helping to promote its break-up plan, JANA's dissident nominees have jeopardized their credibility, objectivity and independence-- As Agrium stated in a March 22, 2013 press release: "Agrium has maintained from the very beginning that JANA's "portfolio-weighted composite" is not a measure of performance that Agrium uses or accepts. Presentation of this concept by Agrium was simply to illustrate the misinformation in what JANA was advocating."-- ISS wrongly attributes the use of EBIT/GP as "an appropriate measure for distribution companies" to Agrium. This too is plainly wrong. In a March 19, 2013 letter to ISS, Agrium Executive Vice President and Chief Financial Officer Stephen Dyer, wrote: -- JANA Partners introduced this measure in their January 23, 2013 presentation and continued to use it in their Proxy Circular even after Agrium's January 28, 2013 Analyst Day where we illustrated that Agrium retail's EBITDA margins were highly superior to those of our competitors. -- EBIT to Gross Profit is not a metric that either Agrium or its competitors use. We do not see value in this measure as it is not a margin calculation but a ratio mixing cash and non-cash accounting numbers. Agrium retail has very strong margins as evidenced by our high EBITDA margins which you have reviewed. Agrium retail margins have always significantly exceeded margins of our closest direct agricultural retail peers (Royster-Clark and UAP). Agrium has consolidated Royster-Clark, UAP and many tuck-in acquisitions (all with EBITDA margins averaging well below 6%) since 2006 and has successfully increased its total North American EBITDA margins to over 9%.-- JANA remains committed to the "golden leash" payment scheme despite strong negative reactions by shareholders, governance experts and others-- JANA's dissident director pay scheme demonstrates that JANA's nominees are not aligned with other shareholders and that JANA has a short-term vision for Agrium of less than 30 months