The board of NZX-listed seafood company Sanford is in the spotlight again with the New Zealand Shareholders’ Association questioning a new director nomination due to concern about cross-relationships.
Tasman Equity Holdings, a 3.2 per cent shareholder in Sanford, has nominated William John Strowger, known as John Strowger, as a non-independentdirector for a vote at the company’s annual meeting in Auckland on December 18. He would not be an independent director due to being a shareholder in Tasman.
Strowger, a commercial lawyer, is chairman of NZX-listed Skellerup Holdings. In essence, he is the boss of independent Sanford director David Mair, Skellerup’s chief executive. The NZSA noted in a briefing to members that David Cushing, a 3.7 per cent shareholder of Sanford, is also on the board of Skellerup.
In response to Herald questions, Sanford said Strowger’s de facto partner is the sister-in-law of Sanford chairman Sir Robert McLeod.
Earlier this month directors Abby Foote and Fiona Mackenzie announced they were leaving the Sanford board. Foote’s resignation was effective immediately, while Mackenzie said she would not be seeking re-election at the annual meeting.
In a statement to the Herald, Sanford said Strowger’s nomination to the board was made by a shareholder in accordance with the NZX listing rules and had been properly disclosed in the company’s notice of annual meeting.
“The outcome of his nomination will be decided by a vote of Sanford shareholders at the company’s annual meeting on December 18, in line with well-known and established procedures.
“Mr Strowger’s existing business relationships have been disclosed. Mr Strowger’s de facto partner is the sister-in-law of Sanford’s chair. This relationship has no bearing whatsoever on the board’s recommendation that Sanford shareholders vote in favour of Mr Strowger’s election to the board, nor is it considered relevant to the board’s determination that, if elected, Mr Strowger would not be an independent director.
“The board also does not consider that Mr Strowger’s business or social connections with certain independent directors of Sanford would compromise the independence of those existing independent directors.”
The statement said that as set out in the notice of annual meeting, the board supported Strowger’s election and recommended shareholders vote in favour of the resolution.
The Herald has also approached 19.8 per cent shareholder Ngai Tahu Investments, Sanford’s biggest single shareholder, for comment.
NZSA’s Mander told the Herald the association didn’t doubt the capability of the individuals involved.
“....But we do hold some concern as to the level of independence able to be exercised by the independent directors in the context of the cross relationships inherent within the Sanford board.”
It is the second time this month questions have been asked of Sanford’s board.
Of her sudden departure from the board, Foote in a statement to the Herald said: “I am no longer aligned with the view of the majority of the board as to the best interests of the organisation in particular as it relates to actions by significant but minority shareholders which are making it increasingly difficult to govern the organisation in accordance with the expectations of the NZX Corporate Governance Code and my view as to good practice for listed companies.”
Abby Foote resigned days before another Sanford director decided not to stand for re-election.
If Strowger is voted in by shareholders, Sanford’s board would comprise two independent directors McLeod and Mair, and two non-independent governors, Craig Ellison and Strowger.
Ellison, a director of Sanford, is acting chief executive of the company. A search for a new CEO would start next year, the company said.
Sanford shares are held by a wide range of shareholders, including retail investors.
NZSA in a briefing to members on Monday said there was a risk of small shareholders “being caught in the crossfire between other large and wealthy shareholder groups.
“We know that New Zealand can be a small place and that all of the individuals involved are respected and capable members of the business community. Nonetheless, on the face of it, this all seems a little too close for comfort when it comes to exercising independent judgment.
“While the election of John Strowger per se may be appropriate, we believe that David Mair and Sir Robert McLeod would be hard-pressed to maintain full independence given the nature and cross-dependency of relationships,” the NZSA briefing said.
Strowger’s nomination is on the heels of NZSA raising concern over the departure of Foote and Mackenzie. At the time it said it was concerned Sanford “falls into favouring a particular minority shareholder, albeit a large shareholder in the case of Ngāi Tahu.
“We are concerned about the impact of those resignations and what is going on behind the scenes and whether that will result in governance processes and structure that don’t support the interests of retail shareholders,” Mander said at the time.
There’s been speculation Ngāi Tahu has its sights on tailoring the board composition to its preference for industry experience.
Further fuelling that speculation has been the appointment of its Ngai Tahu nominated director Ellison as interim CEO.
Ellison, experienced in fishing industry management and leadership, has a history with Ngāi Tahu companies. He was appointed by the Sanford board after the resignation of chief executive Peter Reidie in August.
Andrea Fox joined the Herald as a senior business journalist in 2018 and specialises in writing about the dairy industry, agribusiness, exporting and the logistics sector and supply chains.
