By PETER GRIFFIN
Fonterra has recruited an old hand from the Australian business community to its board of directors, filling a void created by the shock departure of Mike Smith in January.
Former Telstra chairman David Hoare joins Fonterra as an independent director, adding the $12 billion dairy giant to a portfolio of directorships that includes BT Financial Group, Comalco, Hanson and CRI.
Hoare was chairman of Telstra for much of the 1990s, making his exit in 1999 as the global telecommunications sector came to the end of a golden decade of growth and profitability.
His Fonterra appointment is a sign of the international experience the company has been seeking to add to its board.
In May, Fonterra chief executive Craig Norgate signalled that the company would be considering Australia part of its "home market".
Fonterra owns significant portions of the Australian dairy industry outside the town milk sector.
Fonterra was rocked by the departure of Mr Smith, an independent director, who claimed Fonterra's board makeup would work against the company moving forward.
He favoured a slimmed-down board of nine - five farmers and four independent directors.
Hoare said he was aware of the company governance issues that had troubled Fonterra but had no qualms about the number of farmer directors on Fonterra's board and was used to working as part of a dozen-strong board at Telstra.
"I've no problem with having dairy farmers as colleagues,"he said.
"People who are successful on the land have a very finely honed sense of risk."
Fonterra proposes to reduce the number of farmer directors on its board from 10 to nine and increase independent directors from three to four.
The changes will require 75 per cent shareholder support and 50 per cent approval from the Shareholders Council, the body representing all of the farmers that make up Fonterra's shareholders.
The proposal will be voted on at a special meeting on July 26.
Hoare was unaware of Fonterra's plans to offer internet and telecoms services to its 13,000 farmers. "I'm not much good at climbing up poles or soldering copper wire pairs," he quipped.
The details of that plan are still being formulated, but Telecom and TVNZ's broadcasting arm, BCL, are expected to be involved as infrastructure partners.
The dairy industry is new territory for Hoare, but he said the job was as much about marketing the Fonterra name internationally as domestic dairy issues affecting the business.
Hoare said his experience at the top of a major corporate like Telstra would also help the board, who has watched closely the telco's battle to maintain its monopoly since his departure.
Telstra, which faces strengthening competition from competitors like Optus and AAPT, is being prodded to offer better telecoms wholesaling agreements to its competitors and faces complete privatisation within a couple of years.
"The local loop market has been one in which Telstra's been the incumbent and they are understandably reluctant to let other people in," said Hoare.
"I'm very sympathetic to the current board and management who have to deal with that."
Hoare, who is based in Sydney, will attend his first Fonterra board meeting next month.