Fonterra chief executive Miles Hurrell. Photo / NZME
Fonterra chief executive Miles Hurrell was paid $4.2 million in the 2021 financial year - double what he took home in 2020 when Covid measures took a big bite out of the dairy company's top executive pay packets.
Fonterra's 2021 reports show Hurrell was paid $4.289m, compared with $2.008 million in 2020, when he received no short or long term incentive payments or bonuses, in line with what he asked staff earning more than $100,000 to sacrifice.
The big dairy co-operative said Hurrell's annual fixed remuneration as at July 31 2021 was $1.95m. Benefits amounted to $124,937 and pay for performance $2.214m.
His 2021 pay packet might have fattened considerably but pales beside that of his predecessor, Theo Spierings.
Spierings was paid $8m in each of 2016 and 2017, and pocketed $4.6m when he departed in mid-2018 despite Fonterra later recording a net loss of $196m that year, its first loss ever.
He was paid a total of $43m in his seven years at Fonterra.
The farmer-owned co-operative, New Zealand's biggest business, has reported a FY21 normalised or underlying after tax profit of $588m, up $190m on the previous year.
"Reported" profit after tax was $599m, down $60m, reflecting last year's significant gain on the sale of two overseas businesses.
Fonterra's annual reports show 7388 employees were paid more than $100,000 in FY21.
The company has around 20,000 employees in New Zealand and globally.
It is the world's biggest dairy exporter and ranks sixth globally among dairy companies by revenue.
The co-op said milk prices were likely to stay strong, which may crimp future earnings.
It also laid out plans to sell assets in Chile and Australia.
Fonterra announced a dividend of 15c a share, taking the total to 20c, compared with last year's total of just 5c.
It settled on a $7.54 per kg of milksolds milk price for the season just finished, taking the total payout for 2020/21 to $7.74/kg.
Fonterra announced a 2021/22 earnings guidance range of 25-40 cents per share and has also reaffirmed its 2021/22 forecast farmgate milk price range of $7.25 - $8.75 per kgMS, with a midpoint of $8 per kgMS.
Hurrell said the strong milk price trend was likely to continue.
"A high milk price is good for farmers and good for the New Zealand economy. However, this does have the potential to squeeze our sales margins and impact earnings," he said.
For the current season, Fonterra's forecast has remained at $7.25 - $8.75 per kgMS, with a midpoint of $8 per kgMS.
Hurrell said Fonterra has an opportunity to differentiate New Zealand milk further on the world stage, with the aim of getting more value.
This would require Fonterra to focus its capital and people on enhancing New Zealand milk and for these reasons the Co-op has reviewed the ownership of its two other milk pools – in Australia and Chile.
"Soprole is a leading Chilean dairy brand, and Prolesur is a subsidiary of Soprole focused on sourcing milk and manufacturing products in Southern Chile.
"The operations do not require any New Zealand-sourced milk or expertise, and in this context, we are starting the process to divest our integrated investment in Chile."
Soprole's annual report shows its profit came to 22.5 billion Chilean pesos (CLP), or NZ$45.8 million, up from 19.25 billion CLP in the previous year, which was hit by falling sales and declining milk supply.