India’s TAFE Targets AGCO’s Governance Changes

Tractors and Farm Equipment launched a campaign arguing that the Duluth, Ga.-based agricultural machinery manufacturer’s recently announced governance changes don’t go far enough.

Share This Post

Share on facebook
Share on linkedin
Share on twitter
Share on email

India-based Tractors and Farm Equipment Ltd. (TAFE) on Thursday, Dec. 4, escalated a campaign targeting AGCO Corp.’s (AGCO) governance, arguing that the agricultural machinery manufacturer in which it holds a significant equity stake should separate the role of chairman and CEO and consider a new lead independent director candidate.

“TAFE continues to believe that separating the role of chair and CEO is needed to reset the governance standards at AGCO and ensure independence of the board at the time of CEO succession,” the tractor manufacturer said in a statement.

TAFE is AGCO’s largest holder with a 16.2% stake. Its chairman and managing director Malilka Srinivasan has held a position on AGCO’s board since 2011.

In August, AGCO said its chairman and CEO, Martin Richenhagen, was retiring while Eric Hansotia, AGCO’s COO, was installed to replace him in both the chairman and CEO positions effective Jan. 1, 2021.

AGCO on Dec. 3 launched changes to its governance and pay structures. In a letter to shareholders, AGCO said it was making some board changes, including the appointment of Mike Arnold, a former president and CEO of metals producer Ryerson Inc., as the company’s lead independent director on Jan. 1, 2021.

In addition, it installed three new subcommittee chairs and set up five-year term limits for board leadership positions including for the lead independent director position.

TAFE, which also issued a presentation to back its efforts, said the changes are a “step in the right direction” but aren’t enough. The investor argued that Arnold isn’t a good candidate for lead independent director because he “does not have the requisite board leadership and governance experience for this critical role and has limited public company board experience.”

According to relationship mapping service BoardEx, a sister company of The Deal, Arnold, 64, has been an AGCO director for 7 years and does not have any other board positions.

TAFE doesn’t have experience launching director contests. The deadline to nominate directors for AGCO’s 2021 annual meeting, expected in April, is March 1, according to research company Deal Point Data LLC.

In a 13D filing on Nov. 12, TAFE said that separating AGCO’s role of chairman and CEO would foster “better governance.” But the Indian company also said it sought “better alignment of compensation programs for senior management with long term performance” and “increased focus by the company on long-term strategy.”

TAFE had previously said it was considering submitting a shareholder proposal to ask shareholders if they thought the separation of CEO and chairman made sense. So far, it hasn’t submitted a proposal, but could do so by March 1 with its own dissident proxy cards.

This article originally was posted on The Deal on December 2, 2020 by Ron Orol. View the original article here.

Follow Ronald Orol on Twitter and LinkedIn.

About the author

Ronald Orol
| + posts

Ronald Orol leads coverage of activist hedge fund managers, a high-profile group of corporate investors who press for blockbuster deals and were the subject of his book “Extreme Value Hedging: How Activist Hedge Fund Managers Are Taking on the World.” Ron produces the Activist Daily and Activist Weekly briefings, which offer exclusives, trend pieces and breaking analysis about insurgent investors and their M&A efforts. Ron also authored “Corporate Governance in the Era of Activism,” a digital handbook for CNBC’s Jim Cramer. He previously worked as a financial regulation and activism reporter at MarketWatch and Dow Jones Newswires.

Subscribe To Our Weekly Newsletter: Executive Insight

A macro view of the global leadership landscape, trends, and implications for you and your business.

More To Explore

gender balance

Female CEOs Improve Gender Balance on Boards

Leading companies are increasingly embracing female leadership in the C-Suite—with implications for more gender-balanced ranks at large, including on their companies’ boards.

Image of the BoardEx Diversity Network

Representing Wider Society in Business

To date, many organizations have focused on achieving gender balance across their boards and leadership teams with government support. Now, recent socio-political events are shining a powerful light on ethnic and racial diversity and for business to be representative of wider society. With the BoardEx Diversity Network, we are throwing our weight behind greater minority opportunity and better balance in business.

Amplify your network

How do you connect to the more than 3 million people and companies profiled in BoardEx?
Scroll to Top

Download your free copy of the recently published BoardEx Global Gender Diversity Report.