At least three farmers are known to be contesting a seat vacated by farmer-director Jim van der Poel and the spots of farmer directors David McLeod and John Monaghan who are up for re-election.
Confirmed contenders are Gray Baldwin from Waikato, Leonie Guiney of Canterbury, and Grant Rowan from Southland.
Farmer-director elections are run by co-operative watchdog the Fonterra Shareholders Council, but after more than a decade of annual deliberations by a candidate assessment panel (CAP), questions persist over whether the chairmen of Fonterra and the council should be on it.
Council chairman Ian Brown agrees the most common feedback from CAP critics is about the panel’s independence.
CAP has had no fundamental changes since its inception when Fonterra was created, he said
That suggested it was probably the most practical solution to assessing skills.
However the 37-member council got a review presentation by the panel’s independent chairman and secretariat after every CAP process, when there was discussion about how it was working and perceived, he said.
The CAP process had not been formally benchmarked against co-operative or corporate best-practice, Brown said.
The current panel is independent chairman Bill Falconer, a veteran company director, Fonterra chairman John Wilson, Brown, council independent appointee Cathy Quinn, chairwoman of law firm Minter Ellison Rudd Watts, and independent John Spencer, an experienced company director and former chief executive of NZ Dairy Group.
Brown said the panel’s job was not to select the next board member of Fonterra but to assess and grade the skills of candidates to help guide farmer-shareholders when they vote.
Candidates were formally and rigorously interviewed for two hours in an Auckland office, away from Fonterra headquarters, Brown said.
Appearing before the panel was optional but few didn’t.
“It’s really set up for farmer-directors (candidates) and they won’t have had a lot of exposure to farmers in a lot of cases. It’s really a tool to put some objective evaluations around their competencies in order that they can start a discussion with farmers at (election) roadshows,” he said.
Southland dairy farmer and company director Maurice Hardie has twice unsuccessfully stood for the Fonterra board, and met the panel both times.
He had no issue with the CAP process and its aim, but the presence of the chairmen of Fonterra and the council was not right, he said.
“They certainly shouldn’t be part of an assessment. Worse than that it doesn’t send a clear message to shareholders. Unless you have an outcome which takes opinion away … and offers clarity, then it’s nonsense.
“When I see individuals who get tremendous ratings and I’m not convinced that I believe those ratings, at that point I know there is a hole in the system.”
But Hardie said the CAP process tried to do the right thing, which was to inform shareholders.
Retiring director Jim van der Poel, a Waikato farmer, said CAP was not perfect.
“But it’s a step in the right direction. It’s better than nothing and better than any other idea anyone’s come up with.”
He declined to comment further because he is still a director until November.
Van der Poel, whose governance career began more than 15 years ago on the NZ Dairy Group board in the days of ward voting, said skill requirements had changed. It was important farmers thinking of contesting a board seat today had some company governance experience.
It was helpful to have an association with Fonterra other than being a supplier.
“Being a councillor is not a natural path to the board but at least if you’ve been a councillor you have been close to Fonterra and understand how it operates.”
Having life experience and understanding how to create value and make judgements and key business decisions was also helpful.
Owning and operating several farms could not be counted as governance experience in itself, he said.
“Broader experience than that is useful. They are a step ahead of those that don’t but it is still a big step to the Fonterra board.”
It took new directors, farmer-elected and independent appointees, time to come up to Fonterra speed, he said. Farmers took a little longer, but the freshness of their many questions was valuable for the board.
“It takes a period of time till they get confidence to take part and be part of that independent thought process.
“So I always say to farmers when they are looking to put someone new on the board that you have to be prepared to support that person for up to three terms because otherwise you never get the benefit of them.”
Director candidates will be announced on September 23, following the CAP process.
