Fonterra names new board candidates

Fonterra Chairman John Wilson. Photo / Richard Robinson

Co-operative faces call for vote at annual meeting on reducing number of directors to improve governance

Fonterra has named six candidates for its board at next month's election and pressure has emerged to reduce the number of directors.

Chairman John Wilson and directors Blue Read and Nicola Shadbolt are retiring by rotation and are eligible for re-election.

The new candidates are Murray Beach (Marlborough), Greg Maughan (Marton), and Ashley Waugh (Te Awamutu).

Beach last year put forward an unsuccessful motion at the annual meeting in Palmerston North, which called for Fonterra to halt its expansion strategy until the milk payout recovered.

Fonterra and Wilson came under fire from farmer shareholders early this year after a disappointing first half result and a very low milk price.

Since then, the company's earnings have bounced back - although they are still well short of historical results. Fonterra's payout forecast has improved to $5-$5.10 a kg from a previous forecast of $4.25-$4.35.

Chris Lewis, Federated Farmers Waikato president, said if Wilson were to lose his seat, it was not clear who would succeed him as chairman.

"It's all very well punishing him for some bad results, but who would replace him?"

Businessdesk reports that Fonterra shareholders and former directors Colin Armer and Greg Gent are calling for a vote at the November 25 annual meeting to trim the co-operative's board.

The pair have put forward a notice of proposal to cut Fonterra's number of directors from 13 to nine to lift performance and improve governance, they said.

The proposal would need 50 per cent of the Shareholders' Council to support it, and 75 per cent backing from Fonterra's shareholders. It would reduce elected directors to six from nine, and appointed directors to three from four.

"Lack of confidence in the company is now causing serious milk erosion to competitors and the commerce performance of the co-op is at an unacceptable level," Gent said. "Continuing along the same path and hoping for a different result is unrealistic."

Earlier this year, Fonterra director and former chief executive of the Commonwealth Bank of Australia Sir Ralph Norris said he would retire at this year's annual meeting.

Gent said: "In recent times we've seen a couple of high-calibre appointed directors depart early, and we need to ask why."

Armer said Fonterra's promise to review governance and representation three years ago hasn't happened and that the 13-strong board installed when the co-operative was formed was a "pragmatic number which facilitated the merger".

The proposal to trim the board won't target anyone seeking election, and would require the Shareholders' Council to hold an election for the six elected directors in March next year.

The election, by post, fax or internet, will take place from October 31 to November 23. A result will be known by November 25.

- Additional reporting: BusinessDesk