The resolutions seek to boost independent scrutiny of the co-operative and give more teeth to the Fonterra Shareholders’ Council watchdog.
Southland farmer Tony Paterson and a concerned shareholders’ group wants an independent review of the Shareholders’ Council.
The review should look at how the council can be a more effective cornerstone shareholder and whether there is a better model.
It should be done by appropriately qualified professionals appointed by the group and the council in consultation, not just the group acting separately.
Paterson said the review should begin immediately and be completed by mid 2020 so any change to the constitution can be ready by next year’s annual meeting.
He circulated his resolution around farmers before sending it to the company and received universal concern about the need to find better options.
The council and the board recommend shareholders vote against the proposal because a review of the council’s functions has already been announced, to be followed by any change in structure required.
The second resolution is proposed by Trevor Simpson, supported by Mike Peters, J H and R Cotman and M J Lumsden, seeking changes to the make-up of the council’s performance committee.
They want some outside appointments to the committee and the ability to seek international expertise and benchmarking on Fonterra’s performance.
The review structure is inadequate and the Northington Partners report was too little, too late, they said.
“The reality is no business can audit itself.
“Shareholders no longer want Fonterra directors, staff or their own shareholders telling them about Fonterra’s performance.
“Such information with the best will is received with a degree of scepticism.
“The time has arrived for us to mature sufficiently enough to want to hear the view on Fonterra’s performance from outside our ranks,” Simpson’s group said.
The board said the action proposed is unnecessary because the role and functions of the performance committee will be included in the review of the council.
The meeting notice said directors and shareholder councillors will not get any increase in pay, according to the recommendation of the remuneration committee to shareholders.
The chairman’s payment will remain at $430,000 and that of the eight additional directors, $175,000 each annually.
Board committee chairmen also receive an extra $35,000.
The council chairman gets $100,000 annually and each committee member $35,000.
Fonterra has recommended to shareholders that KPMG be the auditor for the financial year ended July 31, 2020.
The previous auditor was PwC and the relationship attracted considerable criticism in recent times.
Former PwC executives moved on to governance roles in the company and allegations were made of auditor capture, leading to incorrect business valuations.
