Archer Daniels Shareholders To Stage Revolt Board’s Reaction To Allegations Will Draw Fire At Company’s Annual Meeting

Archer Daniels Midland Co.’s plan to discredit allegations of illegal corporate payments will not be enough to halt a shareholder uprising at next week’s annual meeting.

“It’s not about the allegations. It’s about the board’s reactions to the allegations,” said Jon Lukomnik, deputy comptroller for New York City. “The general conduct and comments of the board do not communicate a concern with control.”

Five New York City pension funds holding 4 million Archer Daniels shares are expected to withhold their votes from the company’s board. At least nine large institutional shareholders are expected to withhold their votes for the 17 directors of Archer Daniels at the Oct. 19 meeting.

It is too late to nominate alternate board candidates, so the shareholder movement won’t prevent the directors from being re-elected, investors said.

But withholding votes will send a clear message to the board, they said.

“It’s just about the strongest signal short of a proxy fight than an institutional investor can send,” said spokesman Matt Aiello of the Council of Institutional Investors, a Washington-based organization of 100 pension funds. The council is tracking a movement by its members to oppose Archer Daniel’s management.

Archer Daniels, the world’s largest processor of soybeans and other agricultural products, is the subject of a widening criminal investigation by the Justice Department of alleged price fixing and illegal payments to top executives.

Several large shareholders are expected to ask questions about the investigation at the meeting, to be held in a corporate auditorium at Archer Daniels headquarters in Decatur, Ill.

The company, which denies any wrongdoing, will have a special committee of directors give a report at the meeting. The committee has found that current senior executives never made illegal payments to any employees, according to person close to the company in the U.S.

Archer Daniels said it won’t discuss the investigations at the annual meeting. The company declined to comment further today.

The report isn’t enough to satisfy several large shareholders, particularly after recent comments by Archer Daniels director F. Ross Johnson that criticized the FBI and its investigation.

“Rather than attacking sworn law enforcement personnel, the focus should be for the company to examine its own behavior and control environment,” said Ash Williams, executive director of Florida’s pension fund, which won’t vote its 3.2 million shares for the directors.

“It may be the largest number of institutions withholding their votes for the reelection of directors since we founded the Council of Institutional Investors in 1985,” Aiello said. The nine institutions hold 24.6 million shares, about 4.8 percent of the company’s 515 million shares.