AbitibiBowater, Inc. (fka ABWTQ)

[Pitt77]

AbitibiBowater and transparency
The chronicle of Michael Van de Walle
Thursday, June 9, 2011 3:12 p.m.

It is unique, if not rare that a company decides to exclude the media from its shareholder meeting. In fact, in 25 years covering business and economics, I do not remember a single case in Quebec. But my memory may fail.

AbitibiBowater paper mill just done on Thursday, claiming it is a "private meeting". While searching a little in the law on securities and on those companies, we do not mark any provision requiring a management company to provide access to the media during his meeting. According to the spokesman of the AMF, Sylvain Théberge, it is the prerogative of the president to admit that he wants on this occasion. In fact, the only ones who have the right, it is of course the shareholders, directors and auditors.

Companies give access to the media at their meetings. They will generally see their immediate interest: it's free advertising.

It has frequently happened that we knew in advance that a meeting of shareholders would be rough. Shareholders may be unhappy with the financial results, in disagreement with management decisions or a militant group for whatever reason may have decided to intervene. And there are the organizations defending the rights of shareholders, as MÉDAC here, which regularly present proposals that do not like the direction and fueling debates sometimes hefty.

Cultivate secrecy

It has often attended meetings turbulent banks in which they decried such astronomical earnings patterns. Or certain companies doing business in countries where respect for democratic rights is the last concern, should face criticism. Bombardier, in particular, had to defend himself repeatedly agreeing a contract with the Chinese government for a rail link to Tibet, which provoked vigorous discussion at annual meetings.

But never, to my recollection, does one have prevented journalists from attending meetings with or without fighting. For, public relations and branding, everyone agrees that transparency is the best attitude to adopt.

AbitibiBowater decision runs completely counter to the usual practices. By preventing journalists from attending the meeting, it gives the impression of wanting to cultivate secrecy.

This is particularly inappropriate on his part that the company private as it is, largely obtained from state financial support and legal. Just this week, the National Assembly of Quebec passed a bill allowing the company to spread out over 15 years rather than five, the repayment of the deficit in its pension fund. The company has granted such an exemption because she was on the verge of bankruptcy and needed alleviate this financial burden. This accommodation has also caused a stir, particularly among retirees and the Parti Quebecois, which blamed management to pocket bonuses of $ 6 million and stock options of $ 200 million while the fund has a deficit $ 1.3 billion.

In addition, to save it from bankruptcy, the government of Quebec has granted the company a loan guarantee of U.S. $ 100 million 2 years ago. Difficult to be more public than that.

Moral obligation

AbitibiBowater has not only shareholders. She also still thousands of employees and factories everywhere, especially in Quebec. Its activities have a substantial impact in many areas. This company has a large number of suppliers and customers who are not necessarily shareholders and which may be legitimately interested in what happens to her.

We could expand the list of reasons for that management of AbitibiBowater gives access to the media at meetings of shareholders. This is perhaps not a legal obligation (it should be, by the way) but it's certainly a moral obligation. Especially when we had the assistance of all taxpayers to get out of the hole.

This decision by management to AbitbiBowater occurs more when it requires companies to adopt best practices in good governance. The time is transparency, not secrecy.

AbitibiBowater has clearly not understood that.

http://www.ruefrontenac.com/michelvandewalle/38284-abitibibowater