Fonterra CEO's massive $8.32 million makes him highest-paid executive

Fonterra CEO Theo Spierings has taken a 78.5 per cent pay rise, making him the highest paid CEO of any listed entity in New Zealand. Photo / Jason Oxenham

Fonterra chief executive Theo Spierings was paid $8.32 million in 2017 - an annual increase of 78.5 per cent.

That remuneration makes him easily the highest paid chief executive of any listed company or fund in New Zealand.

Spierings was paid a base salary of $2.463m, benefits of $170,036, short term incentive pay of $1.832m and long term incentive pay of $3.855m.

That pay equates to $160,000 per week.

Median weekly earnings for wage and salary workers rose $32 (3.1 per cent) to $1094 for fulltime workers in the year to June 30, Statistics New Zealand data showed.

Chris Lewis, dairy industry group chairman and national board member for Federated Farmers, said a lot of Spiering's pay was based on performance incentives and for the board to have given that kind of rise he must have performed at that level.

"Yes it is a lot of money. But Fonterra is a unique business, it is very hard to compare it to any other company in New Zealand."

Lewis said it was more appropriate to compare it to what chief executives in Australia or Europe of similar sized companies earned. He said Spierings spent a lot of his time working overseas.

"If any farmer or supplier has a problem with it that is a question for them to ask the board [of Fonterra]."

Lewis said the value-add side of the business had gone very well and part of Spierings pay would be linked to that.

It is the first time the dairy co-op has broken out his pay. Previously it only revealed its highest paid employee - which was safely assumed to be its chief executive.

Chairman John Wilson told the company's results presentation that the subject of executive remuneration would "undoubtedly" cause comment.

"Yes, they are big numbers," he said. Wilson said that while base salaries had remained largely unchanged, some far reaching targets under its so called "velocity" programme had been met.

Fonterra said Spierings' remuneration was benchmarked using independent third-party remuneration advisers appointed by the board. It was measured against 24 Australian listed companies of similar size.

In 2016, Fonterra's highest paid employee received $4.66m.

The NZ Herald CEO Pay Survey reported departed Sky City boss Nigel Morrison was the highest paid executive for 2016. Morrison, who stepped down in April last year, received $6.49m.

The pay increase was revealed in the dairy co-operative's annual result, released today.

Net profit for the July 31 financial year was down by 11 per cent to $745 million because of reduced margins, the dairy giant said.

A cash payout of $6.52 for the 2016/7 season was announced, comprising a farmgate milk price of $6.12/kg milksolids and a dividend of 40 cents per share.

The profit equates to earnings per share of 46c, down from 51c last year, and compared with an earlier forecast range of 45c to 55c.

Analysts had expected to see a weaker annual result as higher farmgate milk prices, the key input cost for Fonterra, made their presence felt on Fonterra's margins.