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Maple Leaf governance under fire from shareholder

A Toronto investment management firm holding a substantial piece of Maple Leaf Foods now wants to see changes in how the food firm’s board of directors is chosen, who’s chosen and how much they’re paid.

Maple Leaf’s board, however, says such matters are already under review and West Face Capital’s calls for a meeting on the matter would be “costly and unnecessary.”

West Face, which in August bought up about an 11.4 per cent stake in the Toronto-based meat and bakery giant from the Ontario Teachers’ Pension Plan, on Friday filed a requisition for a special meeting of Maple Leaf shareholders to be held “as soon as practicable” on what it calls “serious investor concerns.”

The investment firm, which holds both voting and non-voting shares of Maple Leaf in its West Face Long Term Opportunities Global Master L.P. fund, said it would call for a vote on five “non-binding, advisory resolutions” regarding the “independence and corporate governance practices” of Maple Leaf’s board.

“The deficiencies of Maple Leaf in critical areas such as board independence and corporate governance are well known to its shareholders and the investment community at large,” West Face partner Thomas Dea said in a release Friday.

“After being rebuffed on several occasions when we have raised these concerns with management and the board of directors, we have concluded  that the board needs to hear a strong message from shareholders that the independence and governance practices of Maple Leaf do not satisfy their expectations or today’s standards of good corporate governance.”

Specifically, the investment firm’s resolutions propose that:

  • Maple Leaf’s board 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;
  • at least two-thirds of the directors of Maple Leaf be considered “independent;”
  • each of the committees of the board 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; and
  • that Maple Leaf should 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.


However, according to the chair of Maple Leaf’s corporate governance committee, the Maple Leaf board “had already committed to a proactive process designed to result in constructive board renewal.”

“Today’s statement by West Face and its decision to launch what we believe is a costly, and unnecessary process, knowing full well the board was already commissioning such a review including soliciting their input, is unproductive and contrary to the best interest of Maple Leaf Foods and its shareholders,” James Hankinson, the now-retired CEO of Ontario Power Corp. and a “corporate director” on Maple Leaf’s board, said in a release Friday.

Maple Leaf said Friday its board had recently launched an initiative to review board compensation and succession and had already been “engaged in dialogue with West Face and other shareholders” on those matters.

That review got underway, Maple Leaf said, as Teachers’ two appointed directors left the board and Teachers announced last month it would sell off the rest of its Maple Leaf shares.

The governance committee was “scheduled to meet to consider these matters at the time of this notice,” the company said Friday. It added it will review West Face’s requisition and comment further “in due course.”

A date hasn’t yet been announced for Maple Leaf’s next annual general meeting. Its fourth-quarter and year-end earnings reports are due out Feb. 24.

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