TORONTO (Reuters) - Magna International Inc’s (MG.TO) chairman and two directors, all of whom backed the controversial 2010 buyout of company founder Frank Stronach, will step down, the auto parts manufacturer said on Friday.
Chairman Mike Harris, a former premier of Ontario, and the two directors, Donald Resnick and Louis Lataif, were on a special board committee that approved a plan to pay Stronach nearly $900 million to relinquish control of the company.
Harris came under fire from several prominent Canadian pension funds and other Magna investors who opposed the buyout plan. The shareholders also complained that neither Magna’s board nor its special committee offered an opinion as to the fairness of the deal.
“We are not surprised that these three directors are not standing for re-election,” BMO analyst Peter Sklar said in a note.
“Magna has adopted a majority voting policy and we believe their re-election was unlikely given that these three served on a committee that was responsible for evaluating the transaction to take Frank Stronach out of his control position at what was perceived to be an excessive price.”
The development is “slightly positive” because Harris was a lightning rod for shareholder criticism over Magna’s history of “questionable corporate practices, which we believe are now largely behind the company,” Sklar wrote.
In a proxy circular for the company’s May 10 annual meeting, in which Magna announced the three retirements from the board, Harris wrote that the board introduced key changes in 2011 and early 2012 that enhanced corporate governance and eliminated Magna’s dual-class share structure.
Canadian corporate law does not require directors to win a majority of votes for election, giving shareholders only the option of voting for, or withholding their vote, for directors. That means a single vote for a director can result in their election.
Magna has revised its voting policy so that directors must win a majority of votes in favor of their election at this year’s annual meeting, or resign.
Harris won support of just 38 percent of shareholders at the company’s 2011 annual meeting before the new policy was introduced.
The new nominees for Magna’s board are Scott Bonham, Peter Bowie and Peter Harder. Directors nominated for re-election are Magna CEO Donald Walker, founder Stronach, Kurt Lauk, Trevor Eyton, Lawrence Worrall, Barbara Judge and William Young.
Shares of the Aurora, Ontario-based company were 8 Canadian cents higher at C$47.65 on the Toronto Stock Exchange on Friday afternoon.
Reporting By Susan Taylor; Editing by Peter Galloway