Shake-up stirs Fonterra

By PHILIPPA STEVENSON

New Fonterra chairman Henry van der Heyden has shaken and stirred the milk giant in his first 20 days at the top.

At a nine-hour session on Tuesday, the board set a fast pace, axing the role of deputy chairman, rejigging membership of three board subcommittees and introducing three working groups with greater shareholder representation. It also cut its public relations staff in favour of PR company Baldwin Boyle Group.

Even before Tuesday's monthly meeting executives had presented the finalised Project Galileo new business strategy to all directors who had "unanimously endorsed and supported" it, van der Heyden told the Business Herald yesterday.

The strategy, not expected until December, would be discussed with the company's Shareholders Council this month before going to all shareholders.

Van der Heyden, intent on stamping his mark on a company tagged with a culture of extravagance, also moved to dampen hot spots.

Capital funding proposals such as a separate investment channel for subsidiary NZ Milk were "off the agenda in the short term" under the new strategy.

The strategy would not be substantially different but would have greater emphasis on getting the basics right, "and just doing what we're presently doing a hell of a lot better".

Van der Heyden, known to have fought chief executive Craig Norgate's appointment during last year's merger negotiations, dismissed speculation that he and the Norgate had a difficult relationship.

He had seen Norgate almost daily since last December "and the relationship is very, very positive.

"We actually share exactly the same objectives about what we need to do in the performance of the company, around costs, and improving shareholder relations."

There has been intense questioning of Norgate's role long-term, after he was tainted by the Powdergate illegal exporting scandal involving his former company, Kiwi Dairies.

The review of his contract in June is widely believed to require him to reapply for the job amid a worldwide search - a clause written in during merger negotiations when there was a limited field of applicants.

Van der Heyden declined to confirm the worldwide search clause but said "nothing could bind a board for the future with a CEO".

"That is a key decision the board needs to make [and] we haven't made that decision yet."

He said his promised revision of board subcommittees would spread the workload, give directors wider responsibilities and use their skills more effectively. It would also allow him to have a closer working relationship with all the directors, and speed decision-making.

Deputy chairman Greg Gent loses $20,000 in fees after a 12-1 vote busted him down to ordinary director.

Van der Heyden said a new working group would deal with one of shareholders' main concerns, capital structure, including the fair value share, supplier share redemption rights, and the formula for the manufacturing growth-funding peak notes.