Vetting system to produce 'genuine' candidates

Farmers wanting to be directors of dairy giant Fonterra will have to face a special vetting committee from next year.

Who will on the screening committee has yet to be decided by the Fonterra shareholders council but a proposal that it include the chairman of New Zealand's biggest company, a farmer-owned co-operative, is controversial and seems likely to be dumped. The decision to have a committee assess the merits of aspiring farmer directors follows a review of the director election process by the council, watchdog for Fonterra's farmer shareholders.

The review committee also recommended a cap on candidate campaign spending and a standardised candidate CV, and that farmer directors up for re-election advise a month ahead of nominations opening if they intend to stand again.

The recommendations have been passed by the council, but the composition of the vetting panel is subject to terms of reference, to be drawn up in the next two months.

The review committee recommended the new panel comprise Fonterra's chairman, an independent Fonterra board director, a councillor and an outside governance expert.

Review leader and council vice-chairman Blue Read said concerns among some shareholders and councillors about having the chairman on the committee would be taken "into very serious account" when the terms of reference were drawn up.

"At the moment, I'm not going to commit to anything but I would suggest to you there will be changes."

The first round of nominations in the new vetting process, which will not be introduced until next year, would be kept secret.

"People will get feedback as to whether they have huge potential or none whatsoever.

"We are keen that, in that confidential stage, it be non-judgmental so people get a chance to see how they might develop."

Read hoped the new, more managed system would create better interest in director elections.

"Farmers will know that when people have come through, they've got a genuine candidate."

Fonterra has nine farmer directors and three commercial directors. Last year, directors were paid $97,000 a year and the chairman $194,000.

Read said the objective of the review was to better equip farmers to elect the best-quality directors to the co-operative, which has annual revenue of $11.8 billion.

The level of the campaign spending cap has also to be finalised and will not be implemented until next year.

However, the requirement for directors up for re-election to give a month's notice of their intention has been activated.

Directors Greg Gent, Earl Rattray and Jim van der Poel have said they will seek re-election.