Former Fonterra chief executive Andrew Ferrier has received more than $8 million in his final payout from the dairy co-op, new documents reveal.
It is a lot of money "on the face of it", says Federated Farmers, but Mr Ferrier was also heading the country's "most important company".
The Canadian pocketed $8.2 million in the year to July 31, 2012, according to documents released yesterday.
Ferrier, who was paid $5 million in the prior financial year, left Fonterra in September 2011, so the $8.2 million payout is likely to include some wages.
Fonterra chairman Sir Henry van der Heyden said the payment represented the "wash-up" of Ferrier's performance incentive schemes.
"I know ... it is a lot of money," said van der Heyden, who will step down as chairman in December.
"The fundamental core of our payment system to management is based on performance, so this is the washup of Andrew's long-term incentives and his short-term incentives."
Ferrier's payout compares with the more than $12 million total pay Paul Reynolds received in his last year as Telecom chief executive.
Federated Farmers president Bruce Wills said Mr Ferrier had excelled in his role.
"He took the company to greater heights and certainly grew the company during his tenure there. He's certainly a world-class chief executive, and he did a world-class job."
He had not seen the details of Mr Ferrier's final payout, and that was the job of Fonterra's board, Mr Wills said.
But it was the price of having a well-respected chief executive at the helm.
"On the face of it, $8 million is a lot of money. It's New Zealand's most important company. We really need Fonterra performing well as a country, so we've certainly got to have a very competent person at the top," he said. "He's got a good man to replace him."
Fonterra said its net profit fell by 19 per cent to $624 million in the 2011-12 year, mostly due to the unavailability of tax credits. The farmgate milk price for the 2011-12 season was set at $6.08 per kg of milksolids, down from $7.60 per kg last year.
Ian Brown, chairman of Fonterra Shareholders' Council, which represents the dairy co-operative's 10,500 shareholders, said volatile market conditions during the past 12 months were largely responsible for the drop.
"The council considers that given the downturn in global markets the board has delivered a reasonable return for farmers," Mr Brown said.
"The overall decline in milk powder prices on the GlobalDairyTrade platform and the strength of the New Zealand dollar have served to soften farmer returns and the drop in the farmgate milk price is consistent with this."
Large termination payouts to NZ bosses *
$1.75m Paul Reynolds, Telecom (2012 financial year)
A$1.9m John Hirst, Nuplex (2010)
$3m Tim Miles, PGG Wrightson (2010)
$1.2m Donald Stewart, Skellerup (2010)
*Excludes annual salary and performance incentives. Ferrier's payout is believed to include these.
- APNZ, staff reporter