Terra directors back on the board

November 23, 2009

tractorFertilizer maker Terra Industries rejected another bid from CF Industries Inc on Sunday. But tucked into that rejection was another piece of news that some might have missed — Terra has reappointed the three directors that shareholders voted down last week in favor of a slate of directors backed by CF. The Terra directors that lost out to the CF slate included Chairman Henry Slack.

“The board, by unanimous vote of the directors whose terms do not expire this year, has taken steps to expand to eleven members, to be effective at that time, so that Terra’s three highly-qualified and experienced independent directors, Martha O. Hesse, Dennis McGlone and Henry R. Slack, will continue to serve on the board,” Terra wrote near the bottom of its Sunday night statement. “The board believes that Terra’s shareholders will benefit the most by combining this experience with the new perspective of the three additions to the board.”

The move — although possibly dilutive to shareholder democracy – was not necessarily unexpected.

CF Industries CEO Steve WIlson sent a letter to Terra shareholders earlier this month saying that Terra, a Maryland company, could reappoint the directors under the state’s laws.

“If the Terra board decided to take such action in the exercise of its fiduciary duties (without disenfranchising stockholders through increasing the size of the board beyond what would result from reappointing those directors), we would not be in a position to object,” Wilson wrote in the letter.

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