DAIRY COMPANY

Otago Daily Times, Issue 23810, 17 May 1939, Page 5

DAIRY COMPANY

OTAGO COOPERATIVE DIRECTORS' RESIGNATION SOUGHT MOVE DEFEATED BY PROXY VOTES Another airing of the affairs of the Co-operative Dairy Company of Otago, Ltd., was given at a second extraordinary general meeting of shareholders of the company held yesterday in the Early Settlers' Hall and attended by almost 150 shareholders. The meeting was held as the result of a requisition by a group of shareholders which called on the directors to resign, but a motion embodying thi: proposal was eventually lost on a proxy vote by a substantial margin, although a l?>rge majority of those who were present at the meeting supported it. this meeting, like the one held two months ago, arose originally out of the dismissal of the former factory manager (Mr J J Henry), and the contention of those who supported the request for the directors' resignation was that Mr Henry had been wrongfully dismissed Bound up with this was the manner in which the company's factory had been conducted under Mr Henry's managership and since, and it was on these points that most of the argument took place, although the whole thing was on a much more subdued scale than the previous meeting. At the beginning it was suggested by several shareholders that the chairman of directors (Mr W. Blackie), who was Presiding, should hand over the chairmanship of the meeting to Mr C. T. McCallum. another director, but Mr Blackie said that as chairman of directors he should preside and he proposed to do so. On the motion of Mr M. Marshall, seconded by Mr F. Waite. M.L.C., it was decided that the meeting should be open to the press. Scrutineers for the counting of proxy votes were appointed at this stage. Reorganisation Wanted Mr N. Wright, who moved the motion' calling on the directors to resign, said the motion was amply justified by the dissatisfaction that undoubtedly existed among a large number of the shareholders. A low over-run had been experienced, he said, but the directors, instead of enlisting the aid of the local officers of the dairy' division of the Department of Agriculture, had engaged at great cosi; a chemical analyst from Taranaki; A mistake had also been made in giving, the general manager (Mr S. E. Field) control over the factory manager (Mr Henry), as Mr Field had never had any factory experience and was not acquainted with the manufacture of butter. At the previous extraordinary general meeting of shareholders, after stormy scenes, the directors had agreed to an investigation of the company's affairs by the dairy division, but it had been public property for some time now that the dairy division had refused, as it had no power to investigate the office. The directors, however, had failed to take the shareholders into their confidence in that matter. A great many shareholders were convinced that nothing short of complete reorganisation of the directorate and the management could save the company. Investigations Hem "As you all know, the last extraordinary general meeting was organised by Mr Henry, who considered that he had been wrongfully dismissed, said the chairman, "and he had already asked the board for substantial damages. The board had good and sufficient reasons for his dismissal, but if it had paid the damages asked there would have been no further argument, no meetings, and no risk to the goodwill of the company. As far as investigations go, the board had already called in a responsible officer of the dairy division, Mr Petch, who is chief butter instructor for the South Island, and he investigated not only the manufacturing but also the administrative side of the company. When he failed to discover the cause of the low over-run, Mr P. O. Veale, of Taranaki, was called in. Our auditors have also made two special audits, so that everything possible has been done to guard the interests of the shareholders. The dairy division was asked to make a further investigation, but in view of the past three months' figures, it states that no good purpose could be served by a further investigation by it. " The board has requested the Dairy Division to investigate the last two seasons' figures," Mr Blackie continued, " but we are doubtful if it will consent. This goes to prove that the board has done everything possible, and to-daj* we have the satisfaction of knowing that everything is all mht But with an exservant actively canvassing shareholder it was inevitable that there should be misunderstandings between the board and the shareholders. I hope, however, that we shall be able to satisfy you beyond doubt that t affairs of the company are in good order and under sound and efficient management." Mr C. T McCf'lum: You can't do it. Company's Affairs Sou. '1 By proposing an inquiry by the Dairy Division after the last meeting, the chairman continued, the board felt that it was doing everything possible to satisfy the shareholders, and . was surprised when a requisition was received for another meeting to consider a motion calling for the resignation of the directors. The »oard had then no option but to call the meeting and issue the statement which had been sent to shareholders. Nevertheless 397 shareholders had signed a petition saying that they had complete confidence in the board.

"l wish to emnhasise a most important, fact," the chairman concl .ded. " No charge of mismanagement has been made at the company's office or to the board of directors. The first intimation of these was given at the last meeting, but why wait for an extraordinary meeting? I submit that shareholders generally have been well satisfied with our pay-outs, and I personally have complete confidence in the future of our company. Speaking with a full knowledge of the affairs of the company and as the chairman of directors. I say without hesitation that the affairs of the company are unquestionably sound and that the management is in aD resoects efficient." Mr L. Neilson. who seconded the motion, said that during the past two weeks two of the directors had gone around the country trying to get proxies to squash the votes oi

those shareholders who were present at the meeting. Mr Field had also been in Central Otago on the same business Information Withheld Mr McCallum, a director, said he wished to inform the shareholders .of some of the things that had happened on the directoiate since the last extraordinary general meeting. Certain information which should have been given to all the directors had been hidden. This referred particularly to a letter received from the director of the Dairy Division (Mr W. M. Singleton) in which he had stated that, owing to the lapse of time, he could not carry out the investigation which had been asked for by the directors following the previous meeting. The letter was favourable to Mr Henry, in contrast with the circular sent out recently to shareholders, but it had been kept from the knowledge of the full board of directors. The circular had also been sent out without the authority of the full board. " I am prepared to resign and take my chance of re-eiection with every other member of the board," Mr McCallum said. " I feel that we must have a complete reorganisation for the good of the company." "Directors Should Resign" Mr W. Lee said that although he proposed to support the motion it gave him no pleasure to do so. He said it was a pity the directors had not agreed to an investigation as soon as the previous meeting had been requisitioned, and also criticised the action of the directors in sending a servant of the company around the country for proxies. That action had created a doubt in the minds of shareholders who had hitherto been perfectly satisfied with the affairs of the company. "I heard in Wellington that the Dairy Division had refused to investigate the affairs of the company," Mr Lee said. " That was confirmed by Mr Singleton, and I cannot think that the directors ever approved of the circular that was sent out to the shareholders. I think the directors should resign and take their chance of re-election." Mr Marshall spoke supporting the motion. Information concerning the company's over-run and the grading of its butter was given by Mr D. Cunningham, local officer of the Dairy Division. He said there might be an impression among some of those present that the information that the Dairy Division had refused to undertake the investigation had leaked out from his office." Actually, he had not told anyone, although he would have had no hesitation in giving the information to any bone fide shareholder. Imputations Resented . "It has been suggested that we lack courage and ability, and there has even been a suggestion that we lack common honesty," said Mr Waite, one of the directors. " I resent those imputation's strongly. It has been said that the directors and the staff, have been making irresponsible statements, but they certainly have not a monopoly of that because I have heard some of the stupidest rumours possible about the directors' personal affairs. Those rumours won't stand investigation." The essential fact of the whole dispute, Mr Waite said, was that Mr Henry had been dismissed, and the meetings had been arranged with the object of getting the directors out and reinstating Mr'Henry. He considered that the board had been perfectly right in dismissing Mr Henry. When the over-run was down the board had sought the services of an officer of the dairy division to ascertain where the trouble was. but after investigating both the factory and the office he could not find where the trouble was. It had also asked its own auditors to investigate, but they could not find the trouble, and it was then that Mr Veale. of Taranaki, had been called in. Mr Veale had pointed out several directions in .which improvements could be made in the factory, and he himself (Mr Waite) had seen evidence to support Mr Veale's views. Damage to Factory Mr A. J. Hawke said that whatever was the outcome of the meeting, it would not do the factory much good, and unless they all got together again in a co-operative way the factory would go back. Some of the shareholders had no confidence in the way things had been going on. Mr C. R. Sheat, who opposed the motion, said that the first intimation he had of any trouble was when he received a circular from Mr Henry. The whole thing had been organised at the instance of Mr Henry, who apparently had not been able to cooperate with Mr Field. When a position like that existed in a comDany it was essential that one man must go. Mr Henry, who addressed the meeting largely on the same lines as at the previous extraordinary general meeting, replied to various references made to his conduct of the factory by former speakers. The meeting was also addressed by Mr Field Vote Taken After Mr Wright had replied, the motion was put to the meeting, and a show of hands revealed that there were 98 in favour oi it una 2-j against .The requisite five share-

holders then demanded that a proxy vote should be taken, and when these were counted the motion was defeated by 1498 votes to 787. For the carrying of the motion a 75 per cent, majority was required. The meeting then closed.