McKenzie put a resolution to Fonterra’s annual meeting at Mystery Creek on December 17 seeking constitutional changes that would enshrine a minimum number of farmer directors and only allow those directors to vote for the chair.
The resolution required 75% support but only drew 37%. Former Fonterra director Earl Rattray spoke against the resolution, along with seven of 10 speakers. He said it was an attack on good governance to have some of the most experienced independent directors in Australasia on the board then strip them of the important decision of electing the chair. Appointed directors brought independence, impartiality and objectivity in that decision.
David Gasquoine said the resolution would encourage an A and B team on the board and he wanted nothing that caused the board to act anything other than collectively. Unity was a key theme of the meeting, with new chair John Wilson saying his aim was, “A united Fonterra that New Zealand values and holds out as an example of what a business in this country needs to do – one that wins at home as well as out in the world”.
The co-op had done the hard yards over the last 10 years but now had a transparent and trusted milk price, transparency in business
performance like never before and committed capital.
“Our management team has the refreshed strategy and delivering on it with urgency is front of mind for all,” he said.
Newly elected director Blue Read said during the director candidate roadshow he found although farmers were inordinately proud of
Fonterra, “we do have some communication problems”.
Seconding McKenzie’s resolution, Takaka shareholder Ann Jones said it was time for the “Fonterra family” to have clear, honest transparent and two-way communication delivered in a timely manner. Reconnection was vital following years of debate over capital structure. Outgoing Fonterra chair Sir Henry van der Heyden described that debate, which resulted in trading among farmers (TAF), as a bruising affair. But he also had stern words for farmers who complained about the high share price.
“We’ve got to a position that maybe the outside world values this cooperative more than you and I do and I think that’s a challenge for all of us.
It actually almost turns me inside out when I hear farmers say ‘the share price is too high, I’m going somewhere else’ then in the next breath say they value the cooperative …you cannot ride two horses here,” he said. TAF had added a lot of flexibility, with the three-year rolling share standard and the ditching of the non sharebacked milk price discount for this season.
Fonterra chief executive Theo Spierings said Fonterra wouldn’t sit back and allow its share price to have an impact milk growth. “We are about driving a growth strategy.”
Fonterra had other “levers” available to it to address share price if it was restricting milk supply increases. Both he and van der Heyden said it was too early yet to say where the unit and share price would settle out.
The risk management policy and new limits for the fund were emphatically endorsed by farmers, with 89% voting in favour of resolution eight. Spierings set the record straight about Fonterra’s plans for new offices in Auckland which reports said might cost over $100m.
He said staff were housed in four different office blocks and its lease on its Princes St tower was due to expire in 2016, so it was timely to look at leasing options.
“We will invest dollars in strategy, nothing else.”
