Fonterra close to CEO choice

By PHILIPPA STEVENSON agriculture editor

Fonterra is likely to name the chief executive taking the dairy mega co-op into its third year by the end of the month.

The only two known candidates to emerge from a global search which began in December are present chief executive Craig Norgate and the man he welcomed in glowing terms four months ago as company chief operating officer, Jay Waldvogel.

The job is up for grabs because Norgate's contract ends in July. A two-year appointment followed by an international headhunt was a condition of his employment by the rival companies that merged to form Fonterra in 2001.

Fonterra's ability to keep candidates under wraps in an industry notoriously gossipy worldwide has surprised and frustrated watchers.

Final interviews are now believed to be under way for the job said to come with a salary of $4 million - a doubling of Norgate's current pay designed to make the position more attractive to northern hemisphere candidates.

There has been plenty of interest in the job at the world's fourth largest dairy company with $14 billion turnover, but also suggestions that a range of factors have deterred would-be applicants.

One overseas contender is said to have done "due diligence" on Fonterra's farmer-dominated, 13-member board and backed off after finding it too political.

A $4 million wage may cause farmers to gag on their beer but one source suggested European or American executives wouldn't glance over the equator for less than US$10 million ($18 million), especially when a co-operative could not offer stock options.

The amount of travel required in a firm which sells products in 140 countries from a base in the South Pacific is also said to be a turn-off.

According to one observer the prospect of being accountable to 13,000 shareholders made grumpy by a payout driven down by factors beyond management control, such as currency movements and European subsidies, was unlikely to deter hardened executives.

"Any CEO spends a large amount of time on shareholders," said the source, who also believed a farmer co-operative was unlikely to prove daunting for a seasoned leader. Neither did candidates need dairy industry experience.

"What's important is a track record for creating, articulating and leading a vision."

Statesmanlike qualities would be required to head New Zealand's largest company, a role which inevitably meant "being in large part an ambassador for New Zealand".

One watcher favoured a fresh appointment to finally bury the testy legacy of the two rival manufacturing companies and their statutory marketer that formed Fonterra - New Zealand Dairy Group, Kiwi Dairies and the Dairy Board.

Another said a new appointment would shift the pressure of company performance from the chief executive to directors if the international dairy market deteriorated further. It would be their heads on the block rather than the new executive.

Norgate, raised in Taranaki, and Waldvogel, from Wisconsin in the US, have long but different dairy industry pedigrees.

Norgate is the son of the manager of the once small Hawera dairy factory which grew into the world's largest. He recalled running around the site as a boy.

Farmer's son Waldvogel once described himself as "addicted" to cows.

"I probably subscribe to more cow magazines than anyone else on the planet who doesn't own a cow," he once told his American agricultural fraternity, Alpha Gamma Rho.

Norgate, who in 10 years transformed the $300 million turnover provincial Kiwi Dairies into a national business with $3.9 billion revenue, has gained most of his international experience since heading Fonterra.

Waldvogel joined DMV International - the industrial ingredients division of international giant dairy co-op Campina - in Wisconsin in 1991, moving to its Dutch HQ three years later. After seven years there he joined the Dairy Board in Wellington in 2000 as global marketing director of its ingredients division, NZMP. Norgate said Waldvogel was a world-class appointment for Fonterra.

The background

* July 2001: Craig Norgate appointed chief executive of GlobalCo (later Fonterra) on two-year contract.

* September 2001: Powdergate illegal exporting saga delays company merger; taints Norgate.

* October 2001: Merger sealed; Fonterra formed.

* March 2002: Norgate details "rank and yank" policy; Fonterra to shed 5 per cent of staff each year.

* July 2002: Fonterra makes loss of $50 million; pays farmers a record $5.30/kg of milksolids.

* December 2002: Fonterra launches global search for new chief executive; invites Norgate to apply.

* February 2003: Fonterra lowers payout forecast for a third time to $3.60/kg milksolids.