Fonterra's new leadership is being given the benefit of the doubt by its long-suffering farmer-shareholders, but further financial blunders won't be tolerated.

That was the message from many shareholders approached after the annual meeting of New Zealand's biggest company.

Held in the shadow of an independent report release which concluded Fonterra's financial performance had been unsatisfactory for its 17-year life, the gathering of about 300 farmer-shareholders was bereft of fireworks.

Not even last week's confirmation from their watchdog council that $1.5 billion of their wealth had been destroyed lit their fuses.


While there were plenty of searching questions from the floor about Fonterra leaders' financial mis-steps and investment decisions in China, they mostly came from the usual suspects at Fonterra's always polite and restrained annual meetings.

And as more than a few shareholders later commented, chairman John Monaghan, fronting his first annual meeting after replacing John Wilson, failed to directly answer most of them.

The most gritty question of the day came from former Fonterra deputy chairman and shareholder Greg Gent, who noted Fonterra's auditor PwC, which greenlighted the disastrous investment in Chinese company Beingmate, was "too close" having been on the job for 17 years.

Urging the board to introduce a maximum tenure for such contractors, Gent said such closeness was "dangerous" and had become "a runway" for PwC executives to become Fonterra directors. Two ex-PwC staff are on Fonterra's board.

The lack of fireworks, especially given the latest financial performance of the $20b revenue co-operative threatens its A-band credit rating and the shareholder value destruction involved, would have shocked the New Zealand Shareholders' Association, but Fonterra shareholders are a tactical bunch, as a few observed.

"We've already said plenty," said one, referring to the upset in this week's director election results.

A near record 68 per cent voting turnout of shareholders saw sitting director Ashley Waugh ejected, Leonie Guiney, a former director and outspoken critic of Fonterra's financial performance voted back in, and new blood ushered in, outgoing Zespri chairman Peter McBride.

Monaghan and Fonterra principals are pitching the story that mistakes have been made but with a strategic review underway of Fonterra's whole business and assets, a corner has been turned and shareholders are feeling positive about the future. Wrong, said a shareholder who declined to be named.


"Farmers are a tactical thinkers. They will want to see the results, not just be told they are going to happen."

It's also an unpleasant truth, said one shareholder, despairing of his colleagues, that if the milk price is $6 (per kg of milksolids) or over, some farmers don't give a toss about Fonterra's 20 per cent share price fall since January, weak dividends and capital burn.

Highlights of the meeting included news that interim chief executive Miles Hurrell is being paid "substantially less" than his predecessor Theo Spierings. The Dutchman who exited in early September after seven years in the job was paid $8m in 2017 and $3.5m in the 2018 financial year, Monaghan said in response to a shareholder question.

Hurrell said plans were progressing to turn around Fonterra's financial performance and it had dropped its ambition to produce as much milk as possible.

"Our ambition to achieve $35b in revenue from 30b liquid milk equivalents by 2025 has created confusion because it places too much emphasis on volume," he said.

"Our co-op is not about being big for the sake of it. We're about creating value for our farmers, our unit-holders and for New Zealand."

Fonterra would live within its means, he said. It was committed to hitting earnings per share of 25-35 cents and reducing debt by $800m this financial year. Capital expenditure had been limited to $650m for the current year, $211m less than last year.