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Agrium Inc. (AGU)

April 09, 2013 1:00 pm ET

Executives

Victor J. Zaleschuk - Chairman, Member of Corporate Governance & Nominating Committee and Ex-Officio Member of Special Committee

Victor J. Zaleschuk

Good morning. Sorry for the slight delay. Now we're ready to go. So fellow shareholders, proxy holders and guests, welcome to the 2013 Annual General Meeting of the Shareholders of Agrium. I am Vic Zaleschuk, Chairman of the Board of Directors and pursuant to Agrium's bylaws, I will chair this meeting. [indiscernible]

Unknown Executive

I confirm that the meeting and the proxy cutoff have not been waived or extended. Is there any [indiscernible]. Go ahead Alex.

Unknown Shareholder

Thanks, Mr. Chairman. My name is Alex Moore [ph], I'm a proxy holder with respect to common shares of Agrium. This is a few preliminary points before the formal business of the meeting. First, I'd just like to inform the meeting that we have submitted a request for an opportunity to review proxies and also the completed ballots in connection with the meeting. We understand that, that request is being considered. And if there is an opportunity afforded, it would be after the meeting. We don't propose to make a motion to recess for that purpose.

I'd also like to raise an objection to the inclusion or the acceptance by the Chairman at this meeting of all white proxies that were deposited in connection with this meeting that were solicited pursuant to Agrium's soliciting dealer arrangements pursuant to which Agrium has agreed to pay Canadian brokers and advisors $0.25 per share for soliciting the voting of shares by Canadian retail shareholders in favor of the reelection of management's nominees. With respect to this objection, I would note that the Chairman of this meeting, as the chairman, you have the duty to promote the administrative fairness directed generally towards the best interest of the company. The best interest of the company centers solely in this meeting on the maintenance of the integrity and propriety of the voting procedure. Agrium's payment of soliciting fees, conditional on the reelection of all incumbent management nominees, fundamentally undermines the fairness of the election and the company's -- election of the company's directors and the integrity of the voting process of this meeting. I also have another objection about proxies that were submitted, if you would like to consider that.

Victor J. Zaleschuk

Why don't you give us all of your objections.

Unknown Shareholder

An additional objection, we have -- I also object to any acceptance of white proxies that are deposited in connection with this meeting that are deposited after the proxy cutoff time. I know that Mr. Solomon has indicated that the cut off has not been waived, should it be waived, we will object to the inclusion of any of those proxies at this meeting.

JANA Partners understands that notwithstanding the passage of the proxy cutoff time, representatives of Agrium continue to solicit shareholders' to change their votes, doing so without providing accurate disclosure of the level of support that the board nominees proposed by JANA Partners have garnered from shareholders. The solicitation by Agrium representatives of shareholders after the proxy cutoff has undermined the integrity of the voting process of this meeting.

Those are my objections at this point. Thank you, Mr. Chairman.

Victor J. Zaleschuk

Okay. I'm aware of those objectives, and I have considered them and I'm not prepared to delay or interfere with the results of the shareholder vote on account of these objections. So we will continue.

Unknown Shareholder

I do have another objection, Mr. Chairman.

Victor J. Zaleschuk

Just kind of go through all them at the same time.

Unknown Shareholder

Well, this objection does arise partly in connection with respect to the response to my previous objections. As a result of these rulings, I object to the continuation, Mr. Chairman, of your chairmanship of this meeting, and I propose that an independent chair be appointed for the remainder of the meeting. As mentioned before, it is the rule of the chair to ensure the administrative fairness in connection with this meeting directed toward the best interest of the company. And the best interest of the company centers solely on the maintenance and integrity and propriety of the voting procedure. JANA Partners had requested an independent Chairman be appointed for this meeting on March 28, 2013, and that request was denied. JANA Partners had and continues to have concerns regarding the ability of the Chairman to chair this meeting in an impartial and nonpartisan way. We note that in a March 27th press release, the Chairman stated that there is no basis for JANA to receive even a single board seat, and we are confident that our shareholders will rightly and roundly [ph] defeat JANA's nominees. This public statement, as well as other public statements Mr. Zaleschuk has made regarding JANA Partners, its director nominees and its proposals for the company, clearly suggest that he is not able to act impartially in the context of this meeting. And in particular, in connection with the counting of proxies of the Chairman whether any of the JANA Partners nominees are elected to the board. The Chairman's denial of the objection to the inclusion of proxies solicited by Agrium pursuant to the undisclosed soliciting dealer arrangements in which it is agreed to pay $0.25 per share in favor of the incumbent's reelection, including his own reelection, demonstrates that the Chairman is not fulfilling his obligation to ensure the integrity of the voting process of this meeting.

Victor J. Zaleschuk

Mr. Moore, are done with your objections?

Unknown Shareholder

I'd like to understand first, I have one more objection.

Victor J. Zaleschuk

Well, why don't you go through all of them, please?

Unknown Shareholder

Okay. If the chair does not find himself an independent replacement for this meeting, then I also object to this meeting proceeding based on the manner in which Agrium has conducted its campaign to seek and to reelect the incumbent management nominees and to deny any of the director nominees of JANA Partners a seat on the board. Including the way in which this meeting is being conducted and the determination by the Chairman to accept these proxies, which we've objected to. Specific objections we have are the denial of the meeting protocol that would have allowed for a more efficient conduct of this meeting in which JANA Partners had proposed on March 28 and also Agrium's refusal and continued refusal to appoint an independent Chairman to conduct this meeting. The Chairman of this meeting is obliged to promote fairness of this meeting and the integrity and propriety of the voting procedure. And as indicated in my prior objections, Mr. Zaleschuk has made public statements that has suggested that he is not in a position to chair this meeting in an unbiased and impartial manner. And the Chairman's ruling to allow the inclusion of proxies that were solicited pursuant to the soliciting dealer arrangements, that were conditional upon the reelection of the incumbent nominees, undermines the fairness of the voting process of this meeting.

Victor J. Zaleschuk

Anything further?

Unknown Executive

We have -- okay.

Unknown Shareholder

Sorry.

Victor J. Zaleschuk

No problem. Keep going.

Unknown Shareholder

Thank you. I'm almost done here -- sorry, thank you.

Unknown Executive

Is that all? Okay. Mr. Chairman.

Victor J. Zaleschuk

I've consulted with counsel on these issues, and I intend to proceed as Chairman of this meeting.

I now, at this time, call the meeting to order. With me are Mike Wilson, President and Chief Executive Officer, as well as Gary Daniel, Corporate Secretary. I appoint Gary Daniel to act as secretary of the meeting. Also seated with me are Bob Engbloom, deputy chair of Norton Rose Canada, LLP and his partner, Walied Soliman, who are independent counsel to the special committee of the Board of Directors.

Before we begin, I would ask that you please turn off your phones and other electronic devices now so, as not to disturb the meeting. I appoint Sandra Evans and Nazeem Nahu [ph], both of Canadian Stock Transfer Company Inc., administrative agent for CIBC Mellon Trust Company, to act as scrutineers for the meeting. The scrutineers have provided me with the preliminary report regarding shareholder attendance and representation at this meeting. Would the secretary please report the number of shareholders present in person and the total number of shares they represent together with the number of shares represented by proxy.

Unknown Attendee

Thank you, Mr. Chair. We're pleased to report that there's 483 shareholders, holding 115,604,144 common shares represented in person or by proxy at this meeting. This represents 77.36% of our 149,429,215 issued and outstanding common shares.

Victor J. Zaleschuk

Thank you. This confirms that there's a quorum present for this meeting. I have a declaration of mailing from the Canadian Stock Transfer that all registered holders of Agrium common shares were sent notice of today's meeting and the management proxy circular. With that said, I declare that this meeting has been regularly called and properly constituted for the transaction of business.

Let me now explain the procedures we will follow for today's meeting. Registered holders and valid proxy holders of common shares may vote for the resolutions at today's meeting. The resolutions will be open for a brief discussion before a vote is taken. Shareholders and proxy holders should not address the meeting until recognized by me as chair. If you wish to speak, please come to the microphone. That way, everybody will be able to hear you and please begin by stating your name and confirming that you are a registered shareholder or a valid proxy holder.

In order to conduct the business of the meeting efficiently, each shareholder or proxy holder will be permitted to speak once or have some -- or have one representative speak on the matter before the meeting. All comments must be kept to a maximum of 3 minutes. All questions should be addressed to myself. If the question would be better suited to be answered by another individual, I will delegate appropriately. I reserve the right to terminate the discussion on any matter once the reasonable opportunity has been forwarded to shareholders and proxy holders to express views both for and against the resolutions, notwithstanding that all shareholders or proxy holders have not had an opportunity to speak on the matter.

In order to make the meeting flow more smoothly, we have asked certain shareholders and proxy holders to make motions today.

We will now turn to the business of today's meeting. The first item of business, the company's audited financial statements for the year ended December 31, 2012, and the report of the auditors thereon are placed before the meeting. These audited financial statements are contained in the 2012 annual report, which has been mailed to the shareholders, to all shareholders. The 2012 annual report also is available to shareholders at the registration desk and electronically, on the company's website.

The next item of business is the election of directors. The number of directors to be elected at this meeting has been fixed at 12. I will now receive nominations for the election of directors to hold office until the close of the next annual meeting of shareholders or until their successors are duly elected or appointed.

Unknown Shareholder

Mr. Chair, my name is Stephen Dyer and I'm a duly appointed proxy holder. I nominate those persons specified in the management proxy's circular, namely David Everitt, Russell Girling, Susan Henry, Russell Horner, David Lesar, John Lowe, Anne McLellan, Derek Pannell, Frank Proto and Mayo Schmidt, Michael Wilson and Victor Zaleschuk.

Victor J. Zaleschuk

Thank you. Are there any further nominations?

Unknown Shareholder

Mr. Chairman, my name is Charlie Banner. I am proxy holder in respect of common shares of Agrium Inc. At this time, I move to nominate the following persons as directors of the corporation: Barry Rosenstein, Mitchel Jacobsen, Stephen Clark, David Bullock and The Honorable Lyle Vanclief, and I'll turn it over to Barry Rosenstein to say just a few words.

Barry Rosenstein

Good morning. I'm Barry Rosenstein. I'm managing partner of JANA Partners. As you know, we are Agrium's largest shareholder by far, and no one has greater interest in seeing Agrium succeed than we do. That's why we pushed for change at Agrium. And we're proud of the -- this push led to significant improvements, including the company's first large share repurchase in years. A dividend that increased by 4.5x and improved disclosure after years of reducing disclosure.

We're also gratified that as of the vote deadline on Friday, we have received 59 million votes for one or more of our nominees, including, it appeared, enough votes for David Bullock and me to be elected to the Board of Directors. We have learned, however, that yesterday, 3 days after the vote -- and 3 days after the vote deadline, votes for us were revoked, enough, apparently, to change the outcome of the vote. We don't know why, otherwise, the company would be lobbying people to change their votes. Usually, when election is over and you have more votes than the other side, you have won. Not in this case, however. Apparently offering to pay $0.25 a share was not enough to lock it up. We intend to investigate this vote switching after the voting deadline was secretly extended and, of course, the vote buying and to pursue all appropriate remedies.

From the beginning, we attempted to work behind the scenes and collaboratively with management as we always do. This proved to be impossible as rather than real analysis for the company. We were simply told that our ideas had 0 validity and 0 support. This obviously has proved to be untrue, as the company has already adopted many of our ideas and we have received significant shareholder support. We chose to stick to what matters, which is shareholder value creation. Our campaign was solely about another point of view on the direction of the company and how best to unlock unrealized value to shareholders. We felt that a healthy debate of the issues was a productive exercise for a company that has consistently underperformed in weighted average of its peers and whose margins and return on invested capital have actually declined despite its growth and scale.

We look forward to working collaboratively with the board, not divisively. Unfortunately, management and the board took a decidedly different tack. I congratulate you. Your board approved that if you play dirty enough, violate all precepts of corporate governance, fair play, ethical behavior and democracy, you can still lose the campaign but then barely manufacture a victory after the voting is supposed to be over. You are a board that condoned lying about the shareholder support you had; switching comparables that you came up with yourselves; hiring a mercenary banker who previously argued against your corporate structure and then argued for it when paid by you; buying back stock in an inflated price when you knew that an earnings miss was coming; permitting your management team to threaten shareholders that they would all quit if we got on the Board, which is the violation of Canadian Securities Law regarding selective disclosure; attacking me personally as "lucky," "a pain in the a**," and "a New York hedge fund billionaire" and whatever that was meant to imply; changing your proxy material to falsely claim distribution experience on the board for members who never claimed it before; surreptitiously moving up the voting date by a month and then, when you didn't like the result, lobbying shareholders to change their votes after Friday's voting deadline passed; and bribing brokers and financial advisers for favorable votes. In an era of improved corporate governance, this is the worst example of entrenched power hungry at any cost behavior I've ever witnessed.

They say it takes a lifetime to build a reputation and just an instant to destroy it. I would leave it to you to decide what your reputation in the market is now. The good news is that this tainted vote isn't the end of the story. We remain Agrium's largest shareholder and you will find that we are just as vocal and active outside of a proxy contest as we are within it. We would not hesitate to speak up should Agrium go back to its old ways, and we're not going away.

Victor J. Zaleschuk

Thank you. Are there any further nominations? I declare nominations closed.

We will now proceed to take a vote on the election of directors by way of ballot. Each registered shareholder or properly appointed proxy holder entitled to vote at this meeting received a yellow ballot from the scrutineers at the time of registration. You have heard who the nominees are, I will now call for a vote, by way of ballot, on the ordinary resolution to elect the Agrium directors for the ensuing year. On your ballot, please now mark an X under either, in favor for, or, withhold, across from the names of the nominees who are with -- for whom you wish to vote. You may vote for not more than for our 12 nominees. Registered shareholders and properly appointed proxy holders should complete the ballot then raise your hands, so the scrutineers can collect the completed ballot. Be sure to print and sign your name clearly at the bottom of the ballot. We will pause briefly now to allow for the ballots to be collected.

[Voting]

Unknown Executive

The scrutineers just put up their hand, so people can see them please. Those who have proxies.

Do we have any yellow proxies that have not yet been picked up by anybody? If anybody does, please put up your hands. Nazeem and Sandra, are we are good to go? Let's proceed.

Victor J. Zaleschuk

We will now continue with the business of the meeting as the ballots are being counted. The next item of business is an advisory vote on executive compensation. We believe that a pay-per-performance philosophy achieves the goal of attracting and retaining excellent employees and executive officers while rewarding demonstrated behaviors that reinforce the company's values and help to deliver on its corporate objective. The board has recommended in favor of the advisory vote on Say on Pay for the reasons set forth in the circular. I would ask for a motion for an ordinary resolution on the advisory basis and that the shareholders accept the approach to executive compensation disclosed in the management's circular.

Stella Cosby

Mr. Chairman, my name is Stella Cosby and I'm a registered shareholder. I so move.

Victor J. Zaleschuk

Thank you. Is there a seconder?

Unknown Shareholder

My name is Kathy Rider [ph]. I am a duly appointed shareholder, I second the motion.

Victor J. Zaleschuk

Thank you. We will proceed with the voting on the advisory resolution to accept the company's approach to executive compensation by way of ballot. Each registered shareholder or properly appointed proxy holder received a purple ballot from the scrutineers at the time of registration. On your ballot, please now mark an X under either for or against with respect to this motion. Registered shareholders and properly appointed proxy holders should complete the ballot and then raise your hand so that the scrutineers can collect the completed ballot. Be sure to print and sign your name clearly at the bottom of the ballot. We will pause briefly now to allow the ballots to be collected.

[Voting]

Unknown Executive

Again, I just ask for people to hold up their purple cards.

Is there any purple ballots that are left. Nazeem, are we good to go?

Victor J. Zaleschuk

We will continue with the business of the meeting as the ballots are being counted. Next item of business is the appointment of auditors of the company for the ensuing year and our remuneration to be fixed by the Board of Directors. I would ask for a motion for an ordinary resolution that KPMG LLP be reappointed as auditors of the company to hold office until the next annual meeting of shareholders or until their successor is appointed. At such remuneration may be fixed by the Board of Directors.

Unknown Shareholder

Mr. Chairman, my name is David Pierce. I'm a duly appointed proxy holder and I so move.

Victor J. Zaleschuk

Thank you. Is there a second?

Unknown Shareholder

Mr. Chairman, my name is Wanda Fall and I'm a duly appointed proxy holder. I second the motion.

Victor J. Zaleschuk

Thank you. I will now call for a vote on the motion. As the total number of votes attached to the shares represented at this meeting by proxy required to be voted against this motion is less than 5% of all the votes that might be cast, this motion will be voted on by a show of hands. All those in favor, please signify by raising your hand.

[Voting]

Victor J. Zaleschuk

Withheld?

[Voting]

Victor J. Zaleschuk

I declare the motion carried.

Next item of business is the approval of the Amended and Restated Rights Plan Agreement. The 2013 Rights Plan and its objectives are described in our circular. I would ask for a motion approving the adoption of the 2013 Rights Plan as set out on Page 34 of our circular.

Unknown Shareholder

Mr. Chairman, my name is Angela Lekatsas and I am a duly appointed proxy holder and I so move.

Victor J. Zaleschuk

Thank you. Is there a second?

Unknown Shareholder

My name is Jenna Plague [ph], I am a duly appointed proxy holder and I so move -- second.

Victor J. Zaleschuk

Thank you. I will now call for a vote on the motion. As the total number of votes attached to the shares represented at this meeting by the proxy -- required to be voted against this motion is less than 5% of all the votes that might be cast. This motion will be voted on by a show of hands. All those in favor, please signify be raising your hand.

[Voting]

Victor J. Zaleschuk

Contrary?

[Voting]

Victor J. Zaleschuk

I declare the motion carried.

I suggest that we now pause for a brief recess to allow the scrutineers time to finalize the tabulation of the ballot. I would ask that everyone remain in the room, so that we may reconvene quickly.

Unknown Executive

For the purposes of the minutes, I am advised that the numbers that we will all be receiving will be preliminary. There will be slight adjustments as a result of some late revocations on the blue proxy that were filed, but they will not make a difference to the outcome of the vote, but the numbers are for purposes of the minutes, provisional as a result. Thank you, and we will be back shortly.

[Break]

Unknown Executive

Excuse me, ladies and gentlemen, just a brief announcement. Due to the number of ballots and votes being counted, there's going to be a brief recess or delay for approximately 45 minutes. We thank you for your patience.

[Break]

Unknown Executive

Excuse me, ladies and gentlemen. Excuse me, we expect to reconvene the meeting in approximately 5 minutes, perhaps less. So we'd like to ask you to find your way back to your seats and come back into the room. Thank you.

Victor J. Zaleschuk

Welcome back, everybody. So on the matter of the advisory resolution to accept the company's approach to executive compensation, I'm advised by the scrutineers that the advisory resolution was approved by the majority of the votes cast represented in person or by proxy at this meeting, and I declare this motion carried.

On the matter of electing directors of Agrium, I am advised by the scrutineers that the following 12 director nominees had the greatest number of votes cast represented by person or by proxy at this meeting and are hereby declared elected as directors of Agrium to hold office until the close of the next annual meeting of the shareholders or until their successors are duly elected or appointed: David Everitt, Russell Girling, Susan Henry, Russell Horner, David Lesar, John Lowe, Anne McLellan, Derek Pannell, Frank Proto, Mayo Schmidt, Michael Wilson and Victor Zaleschuk.

Unknown Shareholder

[indiscernible], proxy holder. I just have [indiscernible] responses from the company or the counsel.

Victor J. Zaleschuk

Okay. Thank you.

Unknown Executive

As part of that discussion, we did agree that we would list out the numbers of votes in connection with each of the directors. And I would do so now and then have a short statement, and then we'll go to the conclusion of the meeting.

Mr. David Everitt had 98,592,593 shares voted in favor. Mr. Russell Girling had 101,328,521 shares. Ms. Susan Henry had 59,751,711. Mr. Russell Horner 60,108,290. Mr. David Lesar, 101,305,939. Mr. John Lowe, 101,550,062. Ms. Anne McLellan 101,534,624. Mr. Derek Pannell 60,291,097. Mr. Frank Proto, 59,994,858. Mr. Mayo Schmidt, 60,111,586, Mr. Michael Wilson 101,231,514. Mr. Vic Zaleschuk 101,027,405. Mr. Barry Rosenstein 53,222,983. Mr. David Bullock 46,530,722. Mr. Mitchell Jacobson, 34,002,980. Mr. Lyle Vanclief, 22,723,160. Mr. Stephen Clark, 33,487,144.

Once again, congratulations to those elected. These numbers continue to be preliminary subject to the final audited numbers, which will be filed on SEDAR.

Before we move to the conclusion, I've been asked for purposes of the minutes to simply say that the claims put forward, at this meeting and prior to the meeting, that JANA had 2 seats was always pure speculation. As has been put forward by JANA themselves, there has never been any visibility to, in any way, shape or form to validate those claims. The loss was pure and simple, fair and square. We understand Mr. Rosenstein is upset but reject his attacks on the board and the integrity of this process. The results speak for themselves and stands up to any scrutiny. All of Agrium's shareholders had their say today, and they supported Agrium. The victory for Agrium's nominees was decisive, unequivocal and beyond reproach.

And with that, I ask the chair to conclude the meeting.

Victor J. Zaleschuk

Thank you. That concludes the formal business brought before this meeting as set out in the notice of meeting. I wish to thank you for attending, and I now declare this meeting to be closed. I advise that Mike Wilson will have a press conference in the Primrose Room, which is located in the north part of this floor, immediately following the meeting. Thank you once again for coming and participating.

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