The Canada Pension Plan Investment Board (CPPIB) cast its vote for the nominees of Agrium Inc. (NYSE:AGU) to the company’s board one week prior to the scheduled shareholder meeting next week.
The pension fund’s decision is a setback to the Jana Partner’s proxy fight against the Canadian fertilizer company.
Jana Partners nominated five directors to the board of Agrium Inc. (NYSE:AGU) and encouraged its fellow shareholders to vote for its blue proxy card. The investment management firm said that its independent nominees have the experience and qualifications to push for changes and help unlock the unrealized value for shareholders. The firm owns a 7.5% stake in the Canadian agricultural products and services provider.
Agrium Inc. (NYSE:AGU) and Jana Partners had been arguing over the past several months regarding the performance of the company. Jana Partners believed that the company needs a leadership change to pursue opportunities to improve the performance of the company.
The investment management firm emphasized that Agrium underperformed citing that Agrium’s peer-weighted composite increased by 817 percent compared with its 467 percent returns over the past seven years.
On the other hand, Agrium Inc. (NYSE:AGU) emphasized that its strategy is successful given the fact that it generated 467 percent returns for its share holders. The company also said that Jana Partner’s objective is to break up the company into three small pieces that will destroy shareholder value.
The Canada Pension Plan Investment Board explained that Jana Partners failed to make a compelling case in its demand to change the board of directors of Agrium Inc. (NYSE:AGU). The pension fund manages more than C$172 billion ($169.50 billion) assets.
The CPPIB also stated that it agrees that there are opportunities for improvement in the company but “the dissident’s nominees do not represent the best alternative for optimizing long-term value creation, particularly in light of Jana’s proposed director compensation structure.”
Agrium Inc. (NYSE:AGU) questioned the independence of the nominees of Jana Partners because they agreed to accept a special incentive payment from the investment management firm if they are elected to serve as independent directors in board of the company. Jana Partners argued that its nominees will receive the same incentives given to rest the directors of the board if they are elected.
In recent weeks, several major investors and proxy advisory firms supported Agrium. On the other hand, Institutional Shareholder Services (ISS), a proxy advisory firm encouraged its clients to vote for two of the directors nominated by Jana Partners.
The CPPIB evaluated the research and recommendations provided by the ISS and disagreed with its recommendation and voted for Agrium’s slate of nominees.