Fonterra governance change vote falls short

The most controversial of the proposed measures was the change to the voting system. Photo / Getty Images

Fonterra's plan to alter its governance structure has been defeated with the results of electronic and postal voting coming up short of the 75 per cent required to get through.

At today's special meeting in Hamilton - attended by a few hundred farmers - Fonterra said internet and postal votes in favour of the proposal to cut the board's size to 11 from 13 came in at 63.7 per cent.

The package also involved a significant change to the way candidates are voted on to the board.

Chairman John Wilson said that while the proposal did not manage to reach to 75 per cent threshold, it was clear that farmers wanted to change the governance structure.

He said most of the concern from farmers centred on the changes to the voting procedure and that Fonterra would go back to the drawing board, make same changes, and put another proposal before farmers before the year's end.

"I am confident that we will nail this before the end of the year," he told the meeting.

A motion put forward at last year's annual meeting by farmer shareholders Colin Armer and Greg Gent failed to achieve the necessary 75 per cent support but nevertheless garnered more than 50 per cent of the vote, indicating farmers were in the mood for a change at the time.

The most controversial of the proposed measures was the change to the voting system.

As it stands, a candidate can get on the board with 25 per cent support, whereas the new system means candidates put forward under will need to achieve 50 per cent support under a ratification process.

Internet, postal, fax and proxy voting closed on Wednesday.

The meeting, attended by about 150 so farmers, drew no questions from the floor once the results of electronic and postal votes showed the proposal had no chance of success very early in proceedings.

Wilson said the exercise showed that there was an appetite for change, with almost two thirds of voters voting in favour of the package.

Watch: John Wilson - Fonterra chairman on today's governance vote:

"They want a system that gets the most knowledgeable and skilled candidates on to the board; and a process that encourages diversity and sees our most capable farmer shareholders put themselves forward," Wilson said.

"The fact that we didn't achieve the 75 per cent tells us that the change proposed was a big ask, particularly around the change from being able to choose from any and all candidates," he said. "The board respects that view," he said.

Fonterra Shareholders' Council chairman, Duncan Coull, said he was encouraged by the significant support the resolution received at the meeting.

"Even though the 75 per cent threshold was not reached, the result indicates that the proposal was on the right track and that there is a willingness from shareholders to continue with the process.