SYDNEY, AUSTRALIA — Months after its board rejected a proposal to corporatize, the CBH Group released a booklet on Aug. 15 outlining the options, benefits and trade-offs in relation to potential changes to structure and governance.
It is part of the CBH board’s review in preparation of upcoming grower meetings this September.
In February, the Australian Grains Champion (AGC), backed by GrainCorp, made a proposal to corporatize the cooperative. The offer was rejected, but it did raise the question of whether CBH should remain as a cooperative. GrainCorp is CBH’s publicly-owned cousin and operates the largest eastern Australian grain storage network.
The board said the proposal would destroy value for CBH grain grower members and their strategic network, and gives too much power to GrainCorp. On April 26, CBH released results from an independent grower survey of almost 1,000 growers that showed 78% of grower members supported the board’s decision to reject the AGC offer.
|Andrew Crane, chief executive officer of CBH|
During a panel discussion on July 27 at the Australian Grains Industry Conference in Melbourne, Australia, Andrew Crane, chief executive officer of CBH, said they would examine the structure of the cooperative.
“We have to ask the first question, do they want to corporatize?” Crane said during the panel discussion. “The board will be quite dispassionate in the way it presents that to growers.”
There may be some practices grower members want to change, but that doesn’t mean they have to throw out the cooperative structure. It’s always healthy to do a structure review, Crane said, and ensure the business is doing the best for its members.
Wally Newman, chairman of CBH Group, said the board had been exploring a number of structural and governance options that it wants to share with growers, and begin an informed conversation about what best suits CBH and its grower members now and into the future.
“Our growers are in the rare position of being in control of their own supply chain, and as the owners of CBH, this process gives them an important opportunity to provide input into how CBH is structured and governed,” Newman said.
The information booklet was created to provide unbiased information about what the different ownership and control possibilities would be and how each one potentially may impact growers. The booklet specifically mentions three options: non-distributing cooperative; distributing cooperative; and publicly-listed company. However, it does say there are other structures that could be considered for CBH.
“The aim is to provide an unbiased information package that gives growers a good understanding of all of the moving pieces in this debate – and from there we can have an informed discussion about what suits CBH now and into the future,” Newman said. “These are very complex topics and growers deserve to have all the information before being asked to provide any feedback on the appropriateness of the current model or if changes are necessary.”
Some of the building blocks that the booklet explores include ownership and control; how member value is generated and returned; and access to equity. The governance elements covered in the booklet include the size and composition of the board; eligibility requirements for directors and how CBH ensures the board has the right mix of skills and experience; and how member director elections are conducted.
“We will be holding a series of meetings over the next few weeks to further explore these issues with growers and will then conduct a full quantitative survey of growers to seek their preferences in relation to the structure and governance elements discussed in the booklet,” Newman said. “The review will ensure growers have critical input into the structure and governance of CBH. The feedback gathered from the survey will assist the board to make a recommendation next year and seek a grower vote if it’s required.”
To read the information booklet, click here.