Board resigns, reform begins

November 07, 2017

John Bradford, James Sides, Bruce SImpson, former director Sharman Stone who resigned in May this year, Mark Robertson, Ben Barlow, Chris Brooks and Tim McKindlay.

A full-scale reform of the Murray Irrigation Limited Board structure is underway.

It was sparked by the resignation of all its members on Friday afternoon, with all seven agreeing to stand down at the November 28 annual general meeting.

Chairman Bruce Simpson, in a statement released on Friday, said all directors had agreed to stand down. This included himself, independent director Ben Barlow, and shareholder elected directors Mark Robertson, Chris Brooks and John Bradford.

Mr Simpson said the decision was supported by current Board members Tim McKindlay and James Sides.

Mr Sides was not re-elected under controversial circumstances in the recent election, when a letter from the Board to shareholders endorsed only two of the three existing directors — Mr Simpson and Mr McKindlay.

Mr McKindlay and Mr Sides were due to be replaced by first-time directors Waander van Beek and Phil Snowden from the end of the annual general meeting, however they have also agreed to resign from their elected positions.

Mr Simpson was yesterday locked in meetings with senior staff to determine the process going forward.

Specific decisions on the interim governance structure and timing on a new director election had not been decided at the time of going to print.

However, in what Mr Simpson said was an express aim to instil more confidence in decision making, the company has already earmarked increasing the number of independent directors on the board from one to three.

It is proposed that an eighth Board position be filled by reclassifying the company’s chief executive officer to a managing director. This would give CEO Michael Renehan a seat on the Board.

Mr Simpson wants the reform process to also look at a ‘‘rigorous assessment’’ of candidates for the pending Board elections.

The proposed changes have all stemmed from an independent review of the Board’s performance, which found it to be dysfunctional.

In a letter to the editor (page 13), Mr Simpson said the Board had discussed a number of scenarios on how to quell shareholder concern over the results of the independent report.

This report has not been made public, despite numerous calls from shareholders.

In the end, Mr Simpson said full resignation was considered to be the best, and a ‘‘constructive pathway to achieve Board reform’’.

‘‘We have now reached a time when the process of real Board reform needs to be accelerated,’’ Mr Simpson said.

‘‘At the end of it, shareholders will have candidates who have been vetted by an independent company to ensure they have the aptitude, intellect, basic skills and attributes worthy of sitting on the Board of a company that operates critical infrastructure vital to the livelihood of people and businesses across the MIL footprint.

‘‘No longer will any member of the Board be subject to the influences of any group whose objectives distract from the company’s core business: water delivery, the Board’s legal responsibility under the Water Management Act and the operating licence the company operates under.

‘‘The company will continue to undertake advocacy on issues that impact our obligations under our operating licence.

‘‘Let us put division behind us, let us put our energy into reform and progress, into unity and collaboration, into building a strong, prosperous region.’’

An interim governance structure will be put in place from the end of the annual general meeting.

The company is seeking independent advice on how this will proceed.

‘‘That advice will also determine when an election of directors should be held and in what format,’’ Mr Simpson said on Friday.

‘‘Candidates will be subject to rigorous assessment by an independent, top-tier selection company and the new Board is likely to include four shareholder directors and three independents.

‘‘The CEO’s position will become a managing director appointment, subject to a change in the company’s constitution.

‘‘No one knows more about the business than its most senior manager and as such it is important for that position to have an equal voice at the Board table.

‘‘The Board’s modernisation also calls for a renewed relationship with landholder associations and an increased role for those associations to play in effective, industrial strength advocacy.

‘‘We are working on a Memorandum of Understanding and hope to have it concluded by the end of the year.’’

Murray Irrigation executive manager corporate affairs Peter Smith said shareholder consultation will also be vital in moving forward with the changes.

‘‘The important thing is that we need to have the correct level of constructive consultation,’’ Mr Smith said.

‘‘This is new territory for Murray Irrigation.’’

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