Fonterra's interim chief executive Miles Hurrell is being paid "substantially less" than his predecessor.

Speaking at the dairy co-operative's annual meeting in south Waikato today, chairman John Monaghan would not divulge Hurrell's salary but said it was substantially less than what Theo Spierings took home.

Spierings, who exited the company in September, earned $8 million in the 2017 financial year, and $3.5m in the 2018 year.

Last month Fonterra posted a net loss of $196m, the first loss since it was created in 2001 from an industry mega-merger to be a national export champion.


Its debt level now threatens its A-band credit rating and its asset value has plunged.

The Fonterra Shareholders Council, which is the voice of the company's 10,000-or so farmer-owners, last week said $1.5 billion of shareholder wealth had been destroyed in recent years.

The dairy giant is a $20b revenue company.

Hurrell told the around 300 farmer shareholders in attendance today that the company has plans to turn around its financial performance and has dropped its ambition to produce as much milk as possible.

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

Hurrell said another measure was to maximise New Zealand milk.

"When we shifted to talking about offshore milk pools we also created confusion. The concept of global milk pools can sound like we are creating volume through farm developments around the world. This not what we are doing. I think it's important to clarify this."


He said Fonterra would live within its means.

Hurrell said the company was moving with urgency to lift performance but it would take time to see this effort in results.

The co-operative was committed to hitting earnings per share of 25-35c and reducing debt in the 2019 financial year.

Hurrell said work was underway to reduce financial year-end debt by at least $800m.

Over the next two years the plan was to reduce operational expenses back to 2017 levels.

Capital expenditure was set at $650m for the current year, $211m less than the last financial year.

"We are reviewing all discretionary initiatives in the pipeline and challenging all spending to help us achieve this," Hurrell said.

Fonterra was also looking at ways to ensure "more realistic forecasting" and was investigating increased use of technology to help achieve this.

Monaghan, facing his first annual meeting as chairman after recently succeeding John Wilson who retired for health reasons, said the board had appointed Goldman Sachs to assist it in reviewing options over its troubled shareholding in Chinese company Beingmate.

Fonterra paid $750m for an 18.8 per cent in the infant food company and has lost $405m.

The future of the investment is a priority for the board in reviewing the company's financial performance.

Monaghan noted that among all the bad news about Fonterra's financial performance there were some positive highlights.

The total payout of $6.79/kg milksolids to farmer-owners was the third highest in a decade.

The company injected another $10b into the New Zealand economy – particularly into rural communities where, on average, farmers spend about 50c for every dollar they earn.

"Where we didn't perform was in our forecasting and our earnings – which are certainly not where they need to be."

The annual meeting also heard Fonterra auditor PWC's more than 17 year contract with the dairy co-operative is "dangerous" and has become "runway" for PWC executives to become Fonterra directors.

Former Fonterra deputy chairman and shareholder Greg Gent has urged the board to introduce a maximum tenure period for auditors, saying Fonterra and PWC's relationship is "too close".

Gent noted PWC had given the green light to the company's disastrous $750m investment in Chinese company Beingmate.

Fonterra has so far lost $405m on that deal.

Big applause greeted Gent's statement from the floor of a lively annual meeting.

Monaghan responded that PWC's contract would run until the close of the 2020 financial year.

Challenged by another shareholder on his curt response to Gent's request, Monaghan said he accepted the comments but would not "make policy on the hoof at an agm".

A second election for an unfilled Fonterra director seat won't be held until next year, Fonterra Shareholders' Council chairman Duncan Coull said.

He suggested the rules for the second election may not be the same as those for the election which this week saw sitting director Ashley Waugh ousted as Fonterra's farmer-owners vented their frustration and anger at the company's financial performance. Coull did not elaborate on what the change of rules might be.

The election also saw former director, outspoken Canterbury farmer Leonie Guiney voted back in, along with new blood in outgoing Zespri chairman Peter McBride.

The three were among five candidates for three vacancies on the board.

The protest vote saw the third seat unfilled because the remaining candidates did not get the support needed to cross the line to the top table, so a second election is necessary.