Here's the gist of it. The hedge fund, Jana, is nominating four directors to Agrium's board. Nothing a true blue corporate ever wants to hear, but nothing too untoward there.

Jana wants to give those four directors compensation tied to share returns over the next several years in addition to the compensation they will receive from Agrium for acting as directors. It almost sounds reasonable for the first nanosecond after you read it. Just after that, it sunk in for me and I was appalled by the thought and even more appalled by Jana's response to concerns over the very real conflict of interest this creates.

Jana's view, as reported, is that there is no conflict of interest because "there is no such thing as being 'too aligned' with shareholders". I agree completely IF you are talking about being aligned to the best interests of all shareholders. HOWEVER (and it really is a big however not just because I typed it in all capitals) that is nowhere near the case in this instance.

Here are the problems - Jana's supplementary compensation scheme creates a two-tiered, divided board and a de facto majority shareholder. A deadly combination for the interests of other shareholders - not to mention, the best interests of the corporation (from the true Canadian perspective).

I get especially annoyed by holier than thou hedge funds that try to pass themselves off as staunch supporters of good governance while denying the mere existence of their own significant and unpalatable conflicts of interest.

Puhlease!!! This "golden leash" undeniably obligates those four directors to Jana and its best interests.

Cheers,

Sylvia

PS As always, I'm happy to hear from you whether you agree or disagree - so let me know what you think.