Fonterra, New Zealand’s biggest company, says it has 10,500 dairy farmer shareholders. It says about 2000 turned out to just over 400 nationwide meetings on the preliminary governance reform proposal published in April. These included regional meetings addressed by directors and shareholder council leaders, and informal local «shed» farmer community meetings.
A spokesman for the co-operative said 265 members are on a private, farmers-only Facebook group created for the governance and representation review, and 110 pieces of feedback had been received. This feedback included special feedback forms and to an online survey hosted on Fonterra’s Farm Source website.
Shareholders critical of the reform proposal, particularly its recommendation that direct farmer voting for farmer-director candidates be replaced by ratification voting at the end of a background nomination and selection process, have been vocal about low meeting turnouts, claiming they translate to farmer opposition to the proposal.
On the other hand, the committee of Fonterra board directors and farmer councillors which is the architect of the reform plan, is pitching it to a shareholder base distracted by a severe income squeeze due to the low milk price, 2015-2016 season production wind-up matters and preparation for new season calving.
Reform proposal advocates suggest farmers may be more focused by June 10 when they will be called on to vote at a special shareholders meeting.
Review group member Ian Brown, immediate past chairman of the Fonterra farmer council, suggested the official numbers were not indicative of the true level of farmer conversation about the reform proposal. Fonterra farmers «who still had day jobs to do» were having over-the-fence conversations and discussing the proposal in their communities, he said. «It is a topic of conversation.»
Meanwhile, despite the board-council review committee having a significant rethink about aspects of the initial proposal which riled some farmers and producing a rectified final proposal for vote next month, it appears the committee is in for a fight from shareholders over its decision to stick to its recommendation to replace the current direct farmer voting system.
In response to shareholder concern about potential loss of farmer control of Fonterra, the final proposal, published on May 17, now suggests the Fonterra board comprise seven farmer elected directors instead of the formerly nominated six, and four independent directors. The tweaked proposal suggests the board composition, including size and make-up, be reconsidered in five years.
Other rethinks forced by farmer pressure include adding a second farmer councillor observer to the director nominations committee, providing clarification of the on-farm knowledge skills required of directors and bringing forward a formal review of the farmer council to be completed by November this year, instead of next year.
The main thrusts of the governance reform proposal, which was spurred by a campaign last year by two former directors, Greg Gent and Colin Armer, for Fonterra to cut its board size from 13 directors to nine to improve company performance, are to reduce the 13-member board to 11 directors and change the system of how farmers vote for their representative directors.
Northland shareholder and former Fonterra farmer councillor Mark Croucher said the proposal was «a dog».
«We won’t have a vote. We’ll have an endorsement, and that’s not a vote to me. Because we won’t be voting for anyone (directly ourselves) it will be pushing shareholders further away from the co-operative. I want a strong co-operative because it means we know we will know we are going to get a good milk price. Where there are no co-ops, farmers get slaughtered, particularly dairy farmers.
«Fonterra is being absolutely arrogant with this proposal.»
Croucher said the farmer council was «out of touch» with the shareholder base.
At the other end of the opinion spectrum is Federated Farmers dairy chairman and Fonterra shareholder Andrew Hoggard who said the revised final proposal had addressed his own concerns about the draft reform proposal.
But he expected the proposed new director voting system to continue to be a «contentious» issue.
Croucher said he had more than $1 million invested in Fonterra shares and many more millions of dollars invested in his farmland. For that he expected to be able to vote directly for the farmer directors who would represent his interests.
Source: Stuff
