Chairman wants board of seven

Wool growers will be asked to set the size of the Australian Wool Innovation (AWI) board at its upcoming annual general meeting.

The constitution allows for a 10-member board but current directors believe the job can be done by the seven members now on the board.

AWI chairman Wal Merriman is urging wool growers to vote for a seven-member board at the November 18 AGM and election of board members where there will be five candidates vying for three positions.

The need for a grower vote on the board size follows changes to the Corporations Act where directors are now banned from passing a 'no vacancy' resolution designed to limit board size below the maximum specified in the constitution.

Under the changes, shareholder approval is now required annually before the board can restrict the number of board members below that set in the company's constitution.

An AWI spokesman said that, essentially, if there was not a 51 per cent vote for the board-endorsed number of seven board members the Act stipulated that the size of the board reverted to the maximum - 10.

"The current AWI board is unanimous in its recommendation that the size of the board, currently set at seven directors, should remain at this time," Mr Merriman said.

He said it would allow for diversity of skills and experience, limit administration costs, provide a clear majority through an odd number of directors and maintain the board's current flexibility to be able to appoint another director if it became necessary or desirable.

The candidates include incumbents Brian von Rooyen and WA woolgrower David Webster, AWI-nominated Colette Garnsey and NSW woolgrowers Robert McBride and Alix Turner.

Mr Merriman said if the board reverted to the maximum number, all five candidates up for election would be appointed, assuming they received more 'for' votes than 'against'.

He has asked shareholders to carefully consider why the AWI board has recommended keeping the board at seven directors.

"This new rule applies to all public companies with a constitution that specifies a maximum number of directors," he said.

"I believe if shareholders vote for a board of seven and the subsequent election of three candidates only, this will be the best outcome for the wool industry."

Also included in the AGM pack is the annual report in which AWI has budgeted for a return to spending more than its revenue uptake on the back of a $24.3 million surplus for 2010-11.

With reserves of $95.6 million, the largest since 2004-05, the forecast budget is to skim $6.2 million off that figure and increase expenditure by 50 per cent, or $71.6 million, which still falls well under the levels of five of the last seven years.

The report showed wool levy income was $47 million, up by $11.7 million, but this was offset slightly by a $3.2 million reduction in Woolmark licensing fees.

With a large dependency on income from the levy, AWI has forecast an Eastern Market Indicator average of 1170 cents/kg clean (up 20c/kg on 2010-11) and a total wool clip of 355 million kilograms for the 2011-12 season (up 10mkg).

In keeping with its business model of a 50 per cent research and development and 50 per cent marketing split, AWI's global marketing and business programs in 2010-11 accounted for $25 million, or 52 per cent, of the total expenditure.

Proxies for the AWI AGM close on November 16.