Fonterra chair: Time to end mud-slinging

Fonterra chairman John Wilson says governance changes are about having an effective management team at a time when global dairy market conditions are tough. Photo / Alan Gibson

Fonterra chairman John Wilson has linked chief executive Theo Spierings' resignation rumours to next week's farmer vote on changes to the way the co-operative giant is governed.

Dairy farmers will vote next Friday on a proposal to shrink the board's size to 11 from the current 13 and to change the way candidates are voted onto the board.

The proposals, which require at least 75 per cent support to get through, are aimed at taking some of the politics out of the board voting system and attracting the best candidates for the job.

Rumours surfaced in the Australian media this week that Spierings might go the same way as Murray Goulburn chief executive Gary Helou, who resigned after the company cut its earnings forecasts and dropped its milk price. Fonterra has said there was no substance to the resignation talk, which included speculation that current Air NZ chief executive Christopher Luxon could be the next chief executive of the co-operative.

"There is no truth to the rumours, that's the first thing," Wilson said in an interview with the Weekend Herald.

"The second thing is that it just speaks volumes as to why we need to change the way that we carry out elections and votes within the co-operative, because I'm sure that it is no coincidence that as soon as we are going for a vote with our farmers that we get these sorts of terrible rumours, false stories, mud-slinging and politicking going on around the edges of the co-op."

"The feedback from our farmers over the last week is that they are over it," Wilson said.

"It annoys them as much as it annoys the board and as much as it annoys our executive team," he said, "and it speaks volumes as to why we need to change the governance and representation as well."

"It's all about having an effective management team at a time when global dairy market conditions are incredibly difficult and our team need to be focused on creating as much value as they can in this incredibly difficult market for our farmers."

Fonterra has held about 400 farmer meetings, drawing in about 3000 farmers nationwide.

The most controversial of the measures is the change to the voting system, which will mean doing away with the current single transferable vote system and adopting a ratification method that will require a candidate to achieve 50 per cent support. Wilson said most of the farmer concerns lay around changes to the voting system. "It's a change in the way that we do it, but there is wide acceptance that this represents the best opportunity to attract the best people. There is some discussion about the board's size but I think that there is recognition that the board needs to be approximately 11.

"We are a very large, complex business that is [a] globally-focused business, so it's difficult to compare it with anything in New Zealand."

Under the new rules, the board will have seven farmer directors and four independent directors.

Wilson said getting over the 75 per cent threshold would be a big ask for any organisation. "And it certainly is for our co-operative."