Fonterra shareholders and former board members Greg Gent and Colin Armer have proposed cutting the number board members at the dairy giant from 13 to nine.
Gent, who was formerly Fonterra deputy chairman, said a smaller board was essential to improve governance and performance.
«We all want our cooperative to be more globally competitive and successful with a clear strategy to achieve that. Our farming businesses and livelihoods depend on that,» Gent said.
Fonterra had performed well below the expectations of farmers, Gent said.
«Accountability for company performance begins at the top with the chairman and board of directors.»
In September it was revealed Fonterra’s chief executive Theo Spierings’ received a 2014 pay rise of up to 18 per cent to between $4.93 million and $4.94m.
Around the same time the company announced hundreds more jobs were set to go in addition to 523 redundancies made in July.
Gent said the board was never regarded an optimal size when Fonterra was formed.
A smaller group of directors would ensure all directors were accountable for performance with no «passengers» on the board, Gent said.
The dividend and share price of the co-op was unacceptable and a «fundamental change» was needed at the board level, he said.
«Continuing along the same path and hoping for a different result is unrealistic.»
Fonterra would pay a full year 25c per share dividend while its shares were last trading on the NZX at $5.45, down 10 per cent over the past year.
Gent said the proposal would require the number of elected directors to be reduced from nine to six and the number of appointed directors from four to three to give a total of nine directors.
The proposal would require 50 per cent support from the shareholders’ council and at least 75 per cent of shareholder votes in favour.
If successful the proposal required the shareholders’ council to conduct an election for all six elected directors in March 2016.
Armer said the Fonterra board had promised shareholders three years ago that there would be a review of governance and representation but nothing had happened.
The two former directors said neither of them would stand for election to the board as a result of this process.
Fonterra has been approached for comment. Federated Farmers has also been approached.
Source: Stuff
