Fonterra's shareholders council has its office in Fonterra's Auckland HQ. Photo / Supplied
Fonterra's shareholders council has its office in Fonterra's Auckland HQ. Photo / Supplied
The value or otherwise of the $3 million-a year Fonterra Shareholders' Council is about to be thrashed out again after a scrutiny delay blamed on Covid 19 and calving.
Farmer-owners of New Zealand's biggest company are being called to meetings the length of the country starting Monday by a group conducting an in-house review of the performance and functions of the farmer council, established as a watchdog of shareholder interests when Fonterra was created 19 years ago, and estimated to have cost farmers $50m to operate since.
The review was promised by the council almost a year ago, when it narrowly fended off remit attempts by angry shareholders to have its performance measured by external professionals after two years of heavy Fonterra financial losses.
The consultation meetings will follow-up a survey by the review group of Fonterra's 10,000 farmer-owners, which returned bruising verdicts on the performance of the remunerated council.
Then followed an interim report to shareholders from 1400 responses to the survey, which farmers were asked to keep secret.
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At the time, group independent chairman James Buwalda told the Herald, shareholders were unlikely to get a final report and recommendations in time to vote on at Fonterra's annual meeting in November. He attributed the delay to Covid-19 restrictions. Busy calving time for farmers from July was considered another complication.
James Buwalda, independent chairman of the Fonterra council review. Photo / Supplied
Shareholder reaction to the protracted review and the group's failure to deliver in time for the annual meeting was mixed.
One said the survey results had "shocked" the council, which is seen as a stepping stone for councillors to become Fonterra directors.
It was a "defer, stall and forget strategy". Another said the delay past the annual meeting voting opportunity was "shoddy" and with video technology the group shouldn't use Covid-19 as an excuse.
But others, including group member Federated Farmers president Andrew Hoggard, said the review was too important to be rushed. Buwalda, as independent chairman, rejected any suggestion the council influenced the delay. The review had simply struggled with logistics because of Covid.
An advisory this week to shareholders said one online meeting was scheduled for September 9 for shareholders who could not attend a physical meeting, and views could be emailed to the review group.
The council, meant to be a watchdog for shareholder interests when Fonterra was created by an industry mega-merger in 2001 against Commerce Commission advice, has attracted growing gripes it is instead a lapdog for the Fonterra board.
The claim was inflamed by the big cooperative's $605m net loss last year and advice from the council itself that shareholders had experienced $4 billion of wealth destruction in two years.
Shareholder critics say the 25 member council is redundant in today's business world and note they already pay Fonterra to employ field reps to liaise with shareholders so there is duplication of work.
Supporters argue it is important farmer-owners of Fonterra have a representative body.
The council's budget this year is $3.2m. The delay in a report and recommendations to vote on at the annual meeting means shareholders will likely have to stump up more millions to keep the council in business next year.
