In a press release, AGCO addressed a recent SEC filing from its commercial partner and shareholder Tractors and Farm Equipment Limited (TAFE), which owns a 16% stake in AGCO. In November 2020, TAFE filed a report with the SEC requesting AGCO separate its CEO and Chairman roles "to better fulfill the board’s duty of oversight of the company," as well as the following:
- Better alignment of compensation programs for senior management with long term company performance.
- Increased focus by the company on long term strategy, including portfolio allocation,
- Rotation of board committee chairs and other members of the Board committees to avoid embedded views and bring fresh perspectives to important matters,
- Refreshment of the board on a more regular basis to increase independence and add directors with diverse experience and diverse views of opportunities and risks presented to the company, and
- Regular engagement with stockholders on governance, strategy and performance matters.
AGCO stated the following in its press release:
"AGCO today commented in response to Tractors and Farm Equipment Limited’s ("TAFE") recent Schedule 13D/A filing with the Securities and Exchange Commission. TAFE is a commercial partner of the Company and shareholder, whose Chairman and Managing Director, Ms. Srinivasan, serves as a non-independent director on the Company’s Board of Directors. TAFE’s Schedule 13D/A filing contains a letter to the Board making a number of misleading statements about the Company’s business, ongoing corporate governance enhancements and significant Board composition changes, requesting that three individuals be appointed to the Company’s Board of Directors.
"The Board is continuing its systematic review, development and implementation of best-in-class governance practices and a balanced and measured director refreshment action plan, in addition to the thoughtful execution of our recent management succession process. To best identify director candidates whose skills and experiences are aligned with AGCO’s strategic goals, the Company has engaged Egon Zehnder, a leading executive search firm. After careful evaluation, the Governance Committee, with Ms. Srinivasan attending as a guest, unanimously approved this plan. This process reflects the valuable input received through our broad-based shareholder engagement efforts and underscores our focus on enhancing value for all shareholders.
"As a result of this plan, the full Board, including Ms. Srinivasan, recently welcomed the addition of both Bob De Lange, group president, Services, Distribution and Digital, at Caterpillar Inc., who brings extensive digitalization and distribution experience to the Board, and Matthew Tsien, executive vice president, chief technology officer at General Motors (GM) and president of General Motors Ventures, who brings important technology and product development expertise to the Board. As a result of our ongoing Board refreshment efforts, with five new independent directors appointed since 2017 and three directors not standing for re-election at the 2021 Annual Meeting, average Board tenure is expected to be less than six years by May 2021.
"In addition to this refreshment program, we have executed concrete actions in-line with our commitment to best-in-class corporate governance practices, including (1) the appointment of a new Lead Independent Director, Mike Arnold, the former president and CEO of Ryerson, who brings proven Board experience and an operational and leadership track record with global expertise in industrial businesses, and whose role and responsibilities have been enhanced to demonstrate the Board’s commitment to strong independent oversight, (2) the rotation of Board leadership roles, and (3) the adoption of term limits for Board leadership positions. These actions have been viewed positively by our broader shareholder base during our recent round of engagement.
"With respect to our ongoing Board refreshment program and evolution of our governance practices, the Board is committed to acting in the best interests of all our shareholders, including TAFE and our independent shareholders, recognizing that Ms. Srinivasan’s and TAFE’s interests may diverge from those of our independent shareholders. The Board’s execution of this refreshment and corporate governance plan, which includes its active review of the candidates TAFE has identified for consideration and regular engagement with Ms. Srinivasan, is ongoing and focused on ensuring our Board has the proper skills, qualifications and independence to serve the interests of all our shareholders."