Comment: strange rumblings from the deep south, says Barber

Allan BarberThe appointment of an independent director should normally be an uncontroversial exercise, but Alliance Group has run into some public relations problems, as it seeks to find a successor to its previous chairman, Owen Poole, writes Allan Barber

The problem goes back to the attempt by Fonterra director, John Monaghan, to stand for election as a farmer director sympathetic to the objectives of the Meat Industry Excellence (MIE) group at the AGM in December. However, despite having a shareholding in a major Alliance supplier, he did not comply with the eligibility criteria as a shareholder and his application was rejected.

The next move was for Alliance shareholders and MIE members, Mark Paterson and Mandy Bell, to move a motion that Monaghan should be appointed to the vacant independent director’s position. This motion was supported by a substantial majority of more than a million votes, but the outcome was not binding on the directors.

Since the AGM the board has appointed a search consultant to conduct a search and interview candidates before submitting a final shortlist for the board to make the appointment. The successful candidate must satisfy a series of criteria, including senior management, preferably chief executive, experience, food, ideally meat, industry experience and current in-depth knowledge of the Asian market.

According to Alliance chairman Murray Taggart, he and Monaghan had a conversation during which they agreed that Monaghan didn’t exactly fit those criteria. Taggart was also surprised Monaghan did not already have details of the specifications which the company had made known before starting the process.

It also appears the search consultant made an appointment to interview Monaghan, but on arrival at the pre-arranged location, was told the appointment had been cancelled. Taggart assumed that Monaghan had withdrawn from consideration, but this is now being strongly denied by Monaghan, Paterson and Bell.

In an MIE press release on Monday, Paterson is quoted as saying, “In talking to John Monaghan, he made it crystal clear that he has made no such decision. John is very committed to bringing his skills and experience to assist in building up Alliance Group and leading much needed reform in the red meat sector as a whole. Murray Taggart’s statement calls into question whether there was ever any serious intent by the board to consider the direction of their shareholders.”

Taggart told me he was somewhat perplexed by this, but admitted that Monaghan seems to think he, Taggart, “has been economical with the truth.”

It would appear there is something of a disconnect between MIE and Alliance Group, in spite of the fact one candidate supported by MIE did make it onto the board at the AGM as a farmer director. Statements suggest the company is being very unwise in ignoring the clearly expressed wishes of its shareholders, although the company clearly believes it has a right to select the candidate it considers has the best skill set.

From an outside perspective it is impossible to judge which party is right. It is quite possible Monaghan would bring much needed expertise to the board, but it is equally possible a dairy industry director would have limited value in trying to sort out a very different set of problems in the meat industry.

Time will tell!

Allan Barber is a meat industry commentator. He has his own blog Barber’s Meaty Issues and can be contacted by emailing him at allan@barberstrategic.co.nz.

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