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Deal shuts down Maple Leaf governance dispute

Resolutions that would have rethought how Maple Leaf Foods picks its directors won’t make it to the company’s next annual meeting, following an agreement between the food firm and a vocal new stakeholder.

The Toronto-based meat and bakery giant on Thursday announced an “accord” with West Face Capital, the Toronto investment management firm that picked up an 11.4 per cent chunk of Maple Leaf from the Ontario Teachers Pension Plan last fall and has since raised a number of concerns with the food firm’s governance.

The agreement announced Thursday between the two firms will see West Face CEO Gregory Boland named to Maple Leaf’s board as well as its corporate governance, human resources and compensation committees.

It also commits Maple Leaf to reduce the number of directors to be nominated for election at its annual meeting in 2012, from the current maximum of 14 down to “10 or 12.”

“In the latter case, four of the incumbent directors will not be re-nominated and the board will nominate two new independent directors,” Maple Leaf said.

West Face, in return, will withdraw its requisition for a special shareholders’ meeting to vote on its five governance-related resolutions — among which were to chop the board to nine members from its current 12, and for Maple Leaf to adopt of a shareholder “say on pay” policy over matters of executive compensation.

Rather than call a special meeting, Maple Leaf’s board said before Christmas that the West Face resolutions would have to wait for the company’s regular annual meeting of shareholders, set for April 28 in Toronto.

The annual meeting goes ahead April 28 as scheduled, Maple Leaf said Thursday, but the five West Face advisory resolutions will now “not be considered.”


However, Maple Leaf noted Thursday, its board last month brought in Russell Reynolds Associates, a New York-based executive search firm, to “assist” in hunting up a second new independent director for nomination to the board at the April meeting.

As for Maple Leaf’s newest board member, meanwhile, Boland said Thursday he and West Face are “pleased to have reached this constructive resolution and look forward to working with Maple Leaf Foods to increase shareholder value.”

In all, the deal between the two companies appears to make numerous compromises based on West Face’s now-abandoned resolutions, which until now had called for:

  • at least two-thirds of the directors of Maple Leaf to be considered “independent;”
  • each of the committees of the board to be made up solely of “independent” directors;
  • an independent global executive search firm find suitable independent candidates who would be nominated for election to the board at Maple Leaf’s AGM;
  • Maple Leaf’s board to be trimmed to nine directors, down from the current 12, and fixed at that level as of the date of the company’s 2011 annual general meeting; and
  • Maple Leaf to adopt a “say on pay” policy that gives shareholders the chance at each annual meeting to consider, on a “non-binding, advisory” basis, the company’s approach to executive compensation.

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