(Australian Wheat Board) shareholders will vote on a change to the constitution at the end of next month. Under current arrangements, A-class shareholders (growers) elect 7 positions on the 12-member company board, while B-class shareholders, elect the other Four directors. The directors then Appoint a Managing director who is a director and has the same powers.
The board is asking growers to give away control of the billion dollar public company through the abolition of the A classs shares. A similar resolution in January failed when 62% of A-class shareholders voted against it; with 88% of B-class shareholders voting in favour.
A minimum 75% of A class shareholders must approve the resolution for it to be passed.
As it stands 7 of the 12 AWB directors are wheat growers. Four wheat grower directors, Xavier Martin, Colin Nicholl, Russell Mckenzie and Rodger Schirmer are against the changes with the other 8 (including 3 growers) supporting them.
Those A class share holders (current growers) who do not want to loose control of your board and hence the company must vote No to the proposed changes.
WA Farmers rightly ask:
“Why should we give up our right to control a company that most of us have dealt with for decades, and we consider to be integral to our future”
The AWB executive seem hell bent on attaining their goal of removing grower control through changes to Article 2 of the constitution.
The board argues that removing the Dual shareholding would result in:
Higher B class share values will be obtained in the long run
Better access to capital can be obtained
There will be more investment in AWB shares
More investor confidence in AWB
Broader community confidence
The proposed constitutional changes intend to do away with the dual shareholder status as if it is some anomaly in the market that makes AWB less attractive for investors.
Rupert Murdock’s Newscorp as an example has a dual shareholder class, he seems to have done well and so might I add have his shareholders.
In the USA Warren Buffet’s public company Berkshire Hathaway also has a dual shareholder class. A $10,000 investment in Berkshire 42 years ago would be worth $34,449,000 today; the same $10,000 invested in the Standard & Poor’s 500 would be worth $638,000.
Interestingly both Murdock & Buffet have been criticized for years my sections of the market for their companies dual shareholder class. You judge for your self, if it is OK for Murdock and Buffet (and their very happy investors), surely its not too silly for Australia’s wheat growers?
The value of B class shares will be much more to do with the earnings of the shares than who owns them, unless speculators think it will become a take over target. Growers would not want that.
The AWB have proved very capable of obtaining capital as evidenced by the AWBs ownership of Landmark , a great commercial business, providing financial services and other services to the market place. It has an interest in a fertiliser company, and is said to be expanding its South American operations.
It is a good example to consider the fate of other organizations, privatised, then so called normalised. Take Grain corp. Once a NSW company which swallowed the Qld Grainco a Queensland only company, lovingly owned by Queenslands grain producers. Now Graincorps share price since normalisation (very recently) is said to be approximating half its prior value.
Won’t B class shareholders be pleased with that if it occurs to AWB. And don’t think Cargills relationship with Graincorp isn’t strategic, but thats an issue for another day.
The ownership of intellectual property, markets and contacts and credibility developed over the comapnies 78 year history must surely belong to growers, the very people who raised the money to fund the initial shareholding through their Wheat Industry Fund contributions.
B class shareholders should not be afraid of the AWB structure. It likely will be held much more conservatively by a grower controlled board.
A class share holders who are entirely growers should vote No to the changes and look to replace non representative directors whose integrity must surely be damaged as a result of their assertion that growers would be better off doing away with grower control of the company.
Rowell Walton is an AWB A class shareholder and grain grower.
…………………………………………………………………………………………………..
Update 4th August 2008 @ 7.50pm
For a Link to Wheat Growers Action Group how to vote NO card. Click Here
……………………………………………………………………………………………..
Have Your say.
Tags: AWB, Rowell Walton
Hi just off topic . just wanna ask anyone introduce what is a best company provide good identity theft protection out there ?
Its true that Brendan seems a little strong re the farmer directors who did not support loss of control by farmers.
But we must all remember that had the numbers fallen the other way we may well have asked him to exit gracefully asap. October with a new constitution seems not too far away for all to exit. There will be processes to follow.
We must all move on to the brave new world and do the best we can, congrats to all who participated,(both sides) I can only hope that all the fears some of us have are misplaced and the job turns out easier than we all thought.
Onward to the next battle!
Mr Stewarts attack on his four fellow Directors for taking a Democratic stance for what they strongly believe was in the best interest of the company was nothing short of disgusting.
Not to mention the tactics used to get his own way.
For him to question the ethics of any other person is unacceptable.
Mr Stewart was at the wheel when all this Industry destruction started with the Iraq deal that went wrong. He is also the one holding back legal and privileged information that would most likely exposed just who knew what including himself and some well known Politicians.
Brendan honour your promise fall on your sword and bugger off into the sunset.
You will go down in History but not as a hero. I hope you get what you deserve for what you have done to all us.One day the Cole inquiry may reconvene and the evidence may come out that would take care of your accommodation in your retirement.
The ABC radio and TV are heavily controlled by this government and the previous one and have almost completely voiced support of breaking up and de-regulating the AWB - and also the ABC and SBS are in bed with the government in promoting global warming, free trade, the wars in Iraq and Afganistan and ‘fake terrorism’ to keep everyone in a permanent state of fear and obedience while they sell our country.
It has been lies on lies on lies for at least 8 years and more - when are we going to turn around and stop this evil ?
I attended the final showdown in Melbourne on September 3, strange irony that the day growers gave away their company was the anniversary of the declaration that Australia was at war with Germany in 1939.
I was not at the first meeting that was adjourned ,but was informed that the treatment doled out to the four dissenting Directors yesterday was nothing compared to that of the first meeting of A class shareholders.
I would like to say that those four directors have done a fantastic job in trying to defend the interests of growers against the greed and selfishness of those that supported the “normalisation” of the company.
Xavier Martin, Roger Schirmer, Colin Nichol and Russell Mckenzie. People should remember they’re stand when they are wondering where, in a few years , the critical mass of the industry has gone.
One WA attendee yesterday got up and said, after the final vote was revealed, that he congratulated the board but was wondering if AWB would be able to act as a receiver of last resort in WA as he didn’t think there would be enough cash around to buy the crop!!!
This is the sort of blind stupid ignorance those of us who have opposed the deregulation of export marketing of Wheat have been up against all through this debate, only now when everything is gone are people waking up to the situation we are facing.
The whole thing was a set up right from the United Nations Iraq Oil for Food hoax - US corporations were out to destroy our single desk so they have followed through with that plan. Many politicians particularly agriculture ministers should be charged with treason.
It gets even worse that just attacking us farmers. Politicians on both sides had foreknowledge of the 911 attacks and the Bali bombings to bring about wars in Iraq and Afghanistan.
Many politicians are not loyal to this country , they are wreckers and want to control city people and destroy food producing farmers.
Rowell and Mark you are both pretty right.
Why give up control for nothing - just a theoretical suggestion of higher share price or slightly cheaper finance. I would have thought with the credit crisis many of the banks would look at hard assets behind the company and conservative directors (which would be many growers). Many of the banks will have big write downs on loans made to the boards full of high fliers.
I also say well done to Roger and the other three directors.
Hi everybody,
You might like to check out the latest article on the AWB shareholder issue:
Lets Compare AWB to the Graincorp experience.
Cheers
Your Agmate - Steve
Gordon Davis told growers at West Wyalongs AWB meeting that AWB would remain in Grain Trading under his normalised company if passed.
But when asked just whose grain they would be selling into Australian growers established world markets due to the fact that this new company HAD to maximise returns to Shareholders not growers, he admitted they would be trading FOREIGN grain if the return was better.
Currently AWB has been selling foreign grain into our markets to, as we have been told, keep them open till Australia had an exportable surplus.
They have already got offices set up around the world and have announced that they intend on focusing on Brazil in the future.
I would suggest that Australian grain used to have its quality as its major attraction to our customers. Under this deregulation we have been told that is all out the window now Australian growers should focus on quantity. We were told that by AWB last night as well.
Jimmy, Claire and others that believe the spin doctoring put out by Gordon and his merry band of highly paid followers should realise that AWB has called in a lot of favours to get this vote passed and the support base of state organisations they quote mostly were formed to destroy the single desk as well as those grain trading experts that support the change as they are set to make a killing from selling their services.
We are now being told that under the new constitution the future AWB Directors will receive a windfall of shares. What does the shareholder associations think of that .
As a B Class share holder I can not support Directors receiving exorbitant amounts for doing bugger all . Compared to a grower who puts it all on the line to grow and sell their grain and get bugger all for it.
It just does not add up which ever way you look at it. I would not feed a lot of these high paid Directors let alone give them a bonus.
Buckle your seatbelts we are in for a bumpy ride all the way to the seen of the crash if the Corporate super hero’s get their way.
QUICK QUESTION
HOW MANY VOTES DO YOU NEED TO CALL AN EGM ?
AGENDA
IF B WANTS A OUT SIMPLE
PROPOSE A SOLUTION
A PUTS B IN A NEW BOX C
OR THEY GET WHAT THEY PROPSED RETURNED IN FULL THEY CALLED FOR A OUT…AS A RESULT…DEMOTE THEM TO NON VOTING STATUS C D OR F
Below is of relevance, extracted from the INDEPENDENT (ie no vested interest) crikey.com.au :
AWB Troglodytes Still Fighting for the Single Desk
Author: Stephen Mayne - Shareholder Activist & AWB - B Class Shareholder
The board of former monopoly wheat marketer AWB Ltd has dramatically split; four troglodyte grower representatives have signed a letter opposing constitutional reform.
The AWB realists, led by Queensland grower chairman Brendan Stewart, had a pre-emptive crack at reform that was narrowly defeated (with 65% of growers SUPPORTING reform) at the AGM in February because they feared the Cold War warriors would seize control in the farmer elections and then install a troglodyte as chairman.
While Stewart should be condemned for his role as a director right through the bribes scandal, he has seen the light on corporate governance and championed the push for constitutional reform that will see him and all other grower directors booted from the board.
Former National Party leader John Anderson drove the privatisation of AWB in the late 1990s which included unique poison pills that were an affront to corporate governance. He should come out now and condemn the structure which sees AWB banned from takeovers and growers guaranteed 7 of the 11 board seats and the chair, regardless of who actually owns the company.
No wonder the former $2 billion company is now only worth $840 million. That’s called a huge “governance discount”.
Adele Ferguson has delivered a well-briefed broadside at the gang of four in The Australian today, pointing out that all the governance houses and institutional shareholders are lining up behind reform, which requires support from 75% of the grower shareholders to pass.
Ferguson hints strongly that the four — Colin Nicholl from Western Australia, Russell McKenzie from Victoria, Rodger Schirmer from NSW, along with Xavier Martin from NSW — could face legal action if reform fails because they are not acting in the best interests of the company.
The four may be currently covered by AWB’s directors and officers insurance, but you can bet your bottom dollar that this is being reviewed by the insurer right now, particularly in the current environment of heightened liability paranoia and litigation.
END.
Just a Quick note to the Bloggers who fail to give their names so their friends and peers can consider their opinions……Have the courage to be honest, I am reluctant to be at all swayed by gutless invisibles. If you are an extremist free marketer then at least have the courage to be honest to yourselves.
And to Clair, I wanted to say to you that I know accountants, bankers lawyers, economists and dare I say damn good businessmen who are farmers and directors, and Clair you say you have had a bit to do with financial markets so I guess some farmers may have just a little capacity.
Jimmy, vocal growers you say… Jimmy who ever you are if you take the time to read the press you could be forgiven for thinking that there was nobody arguing on behalf of A class shareholders, wall to wall attacks on A class share holders, by the majority of the board and by self interested B classers by the look of it. You say if the resolution is lost that AWB becomes a sell…well mate I see an opportunity in that! You should have dumped them at $6.00, suppose too greedy to take the profits ? Have you read the rubbish you have written?
Malley farmer says he wants to fight winnable battles…I wish it was as simple as that, Labor was going to be problematic, but certain promises were made, in writing even, by the now prime minister, which he did not keep. We will all remember that, but the behaviour of the Libs, talk about ideological extremism and in competence.
These points are pertinent;
· That there is no logic for A class share holders to give up their power to elect directors to their board as per the constitution.
· If in the future a clear argument is mounted that Grower’s should give up their company at some time, then it will not be difficult to win that debate, but it likely is the same logic which Buffet and Murdock use to keep their dual shareholder class….so unfortunately I see Jimmy taking the money for his B class shares and some others enjoying the opportunity.
· The value of B class shares will be much more to do with the earnings of the shares than who owns them unless speculators think they become a take over target, and growers would not want that.
· The AWB have proved very capable of obtaining capital and I direct readers to the AWBs ownership of Landmark , a great commercial business, providing financial services and other services to the market place.
· People will simply invest more in AWB shares if they see value, AWB before Cole was a very sound performer. Takeover speculation would likely lift its short-term price.
· Investor confidence and community confidence would be enhanced if all connections to the past were severed. Some people would need to consider their positions, which is of course inevitable after this vote.
If there is irrefutable reasons to knife A class share holders then lets hear it, we are no longer arguing about single desks or Guaranteed Minimum Prices, they are long gone, merely grower control through a dual shareholder class.
To the A class attack group, you operate on mob mentality, you should fear leading your mob over a cliff.
Rowell Walton
There’s a reason I didn’t address you directly Rowell. Whilst I admit my response was somewhat of a rant (letting off some proverbial steam maybe?), in the best interests of maintaining my sanity, I will not be drawn into so called debates with such irrational individuals.
Your laughable allusion to “extremist free marketer” is evidence in itself. Your extreme opinions Rowell may make my stance seem extreme TO YOU. People with their head screwed on however, will realise my views are not extreme but rational.
Regarding not disclosing my name, I’m more than happy to share my views/opinions with friends and associates with whom I respect. This is an important point. I have no respect for people (many like yourself who are aspiring politicians) who spread baseless propaganda.
You raise the ironic point of a “mob” walking off a cliff. Reminds me of brainwashed growers being led to a rally in Parkes. Who can blame them, they have been brainwashed by blatant scaremongering which targets their concerns and anxieties.
I’m not willing to put my wellbeing at risk by putting my name in the public domain so that I can be lynched by your “mob”. I also don’t have the time nor the will to debate publicly with fanatical and irrational people like yourself. I’m ashamed I’ve stooped to this level already, let alone putting my name on it.
Regarding AWB shares Rowell, I sold mine a long time ago. I felt I had enough exposure to the grain industry already. Thanks anyway for trying to belittle me as greedy and envious.
My point (which I think you missed) is that the market has no confidence in a grower control period. I tend to listen to the market (who has driven the price of AWB below it’s intrinsic value) and not some fanatic.
Jimmy,
Hope you feel better for blowing of a bit of steam, I’m affraid though that we simply cannot see the logic of groweres giving up something that is theirs.
Wesfarmers, a well run company , all the way from a co-operative had a dual clss system,I belive to a degree it still does…would need to talk to a good accountant to get the stucture right in my mind, but the point is that it was run very well by farmer directors…there is penty of good farmers.
There is nothing personal, plenty of people disagree with me, and let me know,sometimes its `pretty uncomfortable but I find it takes people like yourself to be strait so we may all bennifit from the exchange, not just you and I but all the other people who share our respective views…once it is all on the table we can surely all make better decisions about our collective future.
And I do belive that the next board will trade oversees grain, and that will bennifit B classers and sometimes it may be difficult for A classers to see bennifit, but those are the rules we have been given for the time.
And I just thought I’d add , “barely surviving”, why don’t you go for a more up-beat name, I mean it’s not all doom and gloom! From the prices I’m getting off the email from traders I reckon we’re up for a good year (if we can grow it)!
Was reading the above blogs while I’m waiting for it to rain and I thought I’d do some research.
In Feb 62 percent of the A-class members in favor of reform, I was one of them.
Had a squiz at the Wheat board site, from what I can tell, out of the 7 farmer elected directors, not one has any experience as directors in other listed companies, however I reckon they’re probably better at farming than me! So I might have to agree with “Claire” on this one rather than “struggling farmer”.
I’ve steered away from the politics of farming but it looks to me like the only experience these bunch of directors has is in Politics.
I’m happy to vote differently next time round if someone can find me a director worth voting for.
I’m all about fighting battles that are winnable, to put it in army terms I think we’re fighting a rear-guard action.
I liked the fact that the old single desk pool made life easy, I just don’t think with a Labor government in power, and the lack of support from NSW farmers federation, this isn’t a battle that should be fought.
I reckon that at the moment these directors have two mistresses, farmers and shareholders and although not talking from experience I just don’t think you can keep both happy, I know that it’s hard enough keeping one happy!
I think we need to move forward and be positive about the future…can’t someone smarter than me think outside the square and offer a new approach that fills the hole left by the pool?
As a grain grower in NSW, my concerns are that we are now deregulated by force without ANY compensation for the loss of our single desk,the only ADVANTAGE we had in the CORRUPT world grain markets.
Not even two months have gone by,and AWB Management want to further inflict more pain on the Australian wheat grower by removing grower control from the AWB, so that the multi nationals and large shareholders will have control of wheat marketing profits going directly to the shareholders, while the wheat farmers lose out once again.
Remember without the wheat farmers there is no product to sell in order to make a profit for the shareholder. WHEAT made the company what it is today.
WHAT IS IT? IS IT OPEN SEASON ON FARMERS?
I am calling on all farmers to wake up and fight for your own survival, don’t whinge about it when IT’S LOST.
WAKE UP NOW, AND VOTE AGAINST THIS CHANGE TO OUR AWB CONSTITUTION.
Being a farmer who has previously worked in the financial markets for a number of years, from my perspective, I can see at least one reason why the market would restrict access to capital;
The investment community perceives farmer directors with little, to no corporate experience and with no track-record of running a listed company as a very poor bet. Whether or not the current farmer directors are in fact capable is irrelevant…. perception is reality.
Rowell Walton mentions News Limited and their dual class structure - I can assure you that their board members are not amateurs.
I would not elect the owner of my local newspaper agency on the board of News Limited! Sure, he sells newspapers but does he know how to run News Limited?
One of the markets greatest concerns, especially with the tightening of global credit policy is due diligence. A board controlled by a majority of A class directors, that is farmers, were effectively asleep at the wheel during the Iraq scandal. An A class majority board has also watched as the share price has more than halved in under three years. As a farmer I have decided to retain my b class shares…bad decision I know.
We have to face reality.
A billion dollar listed company controlled by amateurs will never be viewed favourably by the market. Australian farmers will never regain the single desk monopoly. Markets love monopolies which is why credit was never a problem, however the reality is the monopoly has left the building, for good.
Claire I can assure you the grower Director of AWBL are not amateurs as you described.
It seems that even the corporate club of AWB lower themselves to personal attacks on the individuals rather than answering the real issues.
With only two growers on the Board and no A class shareholders AWB has to maximize returns to its Shareholders. To do this will mean selling foreign grain into OUR established markets. They will use a little of our grain to blend but thats all.
If AWBL Board was serious about regaining confidence in the company it would have completed Board renewal long ago and remove Brendan Stewart as he is the last and is most likely only still there to protect the Legal and privileged information withheld from the Cole inquiry which would most likely expose more peoples involvement in the food for oil scam including politicians.
Don’t be fooled for a moment ,these people have self interest in mind to sell Australian growers on normalization, not what is best for the growers.
Statements from Gordon Davis that AWBL will remain in Grain Trading does not say Australian grain.
Would you buy a used car off these spin doctors with what they have been involved in. It is all smoke and mirrors and the A class shareholders will loose everything they have built in the company with “NO” reward.
Would you give away ownership in your business something you have built over many years for no reward.
Don’t forget Board members and staff members come and go, the next ones to come along are not bound by assurances given by those there now.
Keep your head buried in the sand and someone will come along and do nasty things to your exposed body.
Claire you are a breath of fresh air.
For once some common sense in this discussion. That’s all it is. Not rocket science – common sense. Nothing academic, just common sense. I began to wonder if common sense existed anymore.
The vocal growers in this debate are carrying on like a pack of left wing uni students. Frankly I have been ashamed to be a grower in this industry and bow my head in shame listening to absolute scaremongering tripe from Jock Munro et al.
Rather than accepting that we must move out of the caveman era and into the real world, the persistent dribble (see predictable lines from Peter Cannon below) just keeps on coming (although he did forget to mention the “buyer of last resort” rubbish).
Rather than recognising opportunities and moving to grasp those opportunities, rather than recognising that there will be challenges and rising to meet those challenges, these growers just keep toeing the same inept, decrepit lines.
These cowboys will be the death knell for AWB if they continue to push for grower control while missing the point that this will create no confidence whatsoever for AWB as a corporate, publicly listed company.
It’s little wonder 88% of b-class shareholders (ie the investment community) support abolition of the a-class shares. It’s also little wonder that (apparently) 62% of growers have previously voted against the notion given the scaremongering rubbish they are spoon fed (I’m not sure if this number is even accurate).
I am confident in the extreme that if these growers could hear some common sense on this matter (see paragraph 1 above) then the percentage supporting the status quo would be far less.
If dual shareholder status remains AWB is a sell in my view. If AWB can just shake this constriction, and rid itself of something that is squeezing the life out of the company in an extremely competitive environment then AWB is a buy.