The special general meeting vote has resulted in the full suite of constitutional changes proposed to address a growing misalignment between Zespri’s grower shareholders and retired or non-producing grower shareholders.
It has drifted into concerning territory in recent years with more than 18 million shares or about 15% of those issued being held by people who have left the kiwifruit industry.
Zespri chairman Peter McBride said the constitutional changes aim to address an issue that arose over time and, to some extent, the resolutions were doing what the industry had sought right from Zespri’s conception in 2000.
“When Zespri was first formed growers wanted it to be a co-operative but Treasury would not allow it.
“But that is where we are wanting it to head back to today.”
He said failure to realign shareholdings will threaten Zespri’s right to operate as a single desk seller and the Government will not tolerate a body that does not genuinely represent the growers whose produce it is marketing.
In addition to 18 million shares not owned by growers, Zespri has 8% of its shareholding held by producers who are effectively overshared or have more than four shares a tray of production.
Meantime, 29% of shares are owned by producers who have less than a one share:one tray allocation or are undershared.
And about 46 million trays on average were grown to supply Zespri over the past few seasons by growers who do not own any shares in the company at all.
Just over 40% of growers are classed as aligned, with shares that fall between 1:1 and 4:1.
While the misallocation of shares will draw unwelcome Government attention, McBride said it is also a major succession issue as a new generation of younger growers establishes.
“We are at a critical junction with a unique opportunity to formalise what the majority of owners have asked for.”
The changes cap shareholding to four shares for each tray of production and introduce dividend restrictions on shareholders who do not grow kiwifruit.
That includes a dividend cap with a transition period of seven years on producers already overshared. Those who become overshared after the new rules are introduced will have a dividend cap come in over a three-year transition.
A one share-one tray allocation will also allow new entrants to the industry to have an ownership say in the marketer.
A targeted share buy-back programme is also planned for the second half of this year, making an offer to non-producers and overshared shareholders so the shares can be issued to undershared growers.
At the special meeting only one grower challenged the move and the effect it would have on him because he was about to exit the industry.
However, McBride said the attachment of shares to production is not an unusual alignment with the likes of Fonterra requiring exiting shareholders to sell their production shares within a year.
Generally, shareholder support for the moves has been strong, validated through the Kiwifruit Industry Strategy Project where over 80% of growers had already expressed support for the changes.
After five years consultation and development, acceptance of the changes was virtually confirmed.
New Zealand Kiwifruit Growers chief executive Nikki Johnson said growers will be pleased with the outcome.
“The passing of the resolutions was the final step in achieving what growers indicated they wanted in the KISP.
“In 2015 90% of growers voted in the KISP referendum to support proposals to change Zespri’s constitution. The realignment of growers and shareholders is critical to maintaining grower control of Zespri.”
