West Face had sought to change how the Canadian food giant is run and questioned Crawford’s role as an independent director due to his perceived ties with dominant shareholders.
However, based on an agreement reached last week, West Face CEO Gregory Boland will join Maple Leaf’s board of directors and its corporate governance committee alongside Crawford. Boland and an unnamed director for which Maple Leaf says it has launched an executive search will fill two board seats that are currently vacant.
However, the agreement also includes cutting the number of directors on the board by as much as four. So far, the company has not revealed which board members will be replaced.
“Pursuant to the agreement with West Face Capital, the board will also reduce the number of directors to be nominated for election at the 2012 annual general meeting, from 14 to 10 or 12,” Maple Leaf said in a statement. “In the latter case, four of the incumbent directors will not be re-nominated and the board will nominate two new independent directors.”
Linda Smith, a spokeswoman for Maple Leaf, tells InHouse the announcement last week has not affected Crawford’s position on the board. She adds questions on Crawford’s future on the board would be “speculative” at this point.
Smith says Maple Leaf hopes the changes announced last week will improve the company’s value for shareholders.
The changes stem from West Face’s concerns about Maple Leaf’s market performance, but it has also raised questions about Crawford’s status as an independent director due to his close ties with the company’s largest shareholder, the McCain family and its McCain Capital Corp. holding company, in which Crawford is also a board member. Maple Leaf says there is no breach of securities laws and regulations that relate to Crawford’s dual role.
As part of the agreement, West Face, a Toronto-based investment fund and owner of 11.4 per cent of Maple Leaf, has now withdrawn its request that a special meeting to vote on five non-binding advisory resolutions take place.
“We are pleased to have reached this constructive resolution and look forward to working with Maple Leaf Foods to increase shareholder value,” says Boland.
The conflict with Maple Leaf’s leadership came after the Ontario Teachers’ Pension Plan decided to sell its 25-per-cent stake in the company to a group of investment banks. In the process, it withdrew its two members of the board of directors.
Maple Leaf has seen changes in the shareholder base, says James Hankinson, a board member and chairman of the corporate governance committee. “Mr. Boland’s appointment is part of an ongoing process to make changes in the composition and structure of our board that reflect the recent significant changes in our shareholder base.”
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