The proposal, which is raising concerns among some farmer-shareholders about its potential to erode co-operative farmer control, has been in farmers’ hands for three weeks.
Sources say the council of farmers, elected by Fonterra’s farmer-owners to represent their interests, is meeting now with the intention of voting on the proposal in order to meet the company’s timetable for calling an extraordinary shareholders meeting to vote on a final governance reform proposal. It is understood the company is eyeing May 26 for an extraordinary general meeting.
The council is understood to have met on Sunday, May 1 to discuss farmer feedback on the proposal and is now finalising changes urged by farmer feedback. If 51 per cent of the 35 councillors do not vote to support the proposal, it will not proceed to board level and the calling of an egm.
Council leaders could not be contacted.
Proposed governance changes include reducing the number of directors from 13 to 11, replacing the single transferable voting process for farmer-directors with an appointment process, changing the eligibility rules to be a farmer-director, and postponing a review of the council structure and performance until next year.
The proposal, presented to farmers on April 14, is the outcome of a board-council committee review of governance and representation at New Zealand’s biggest company, spurred by a 54 per cent vote by farmer-shareholders at November’s annual meeting.
The November vote followed a remit by two former directors, Greg Gent and Colin Armer, who said reform of the large board structure was years overdue and was required to lift the company’s financial performance and returns to farmers. The remit did not get the 75 per cent farmer support required to change the company’s constitution. But the 54 per cent vote sent a strong message to the board, which, along with the council, voted against Gent-Armer remit, saying a review of governance and representation (council) was already under way in the background. This came as news to many shareholders.
Gent and Armer in a submission to the review group said the proposal treated shareholders’ wishes with «arrogance» because farmers had in November voted for a much smaller board than what was being proposed.
They also claimed the proposal threatened farmer control of the co-operative, effectively giving the reins to the chairman and appointed directors. They called for the current ratio of farmer to appointed directors to be maintained.
Individual farmers this week have expressed concern that they will lose direct voting rights in director elections. The draft paper proposes farmers ratify directors recommended by the council and board after a new appointment process which includes assessment of candidates by an independent body.
Farmers are also concerned the proposed change in eligibility rules for farmer directors to allow for modern farm ownership structures, including limited and equity partnerships, could see people without hands-on farming experience becoming directors.
Cambridge shareholder Garry Reymer said he was more concerned about the delay in reviewing the council.
Farmers felt disconnected from and were leaving the co-operative not because of governance but because the council did not function as it should, he said.
«We can afford to give up some (farmer) power in governance if we had a well-functioning council. They have to be a conduit, which by its very meaning is a connection, with farmers. That is where the council is failing.»
Reymer said the review of the council should be being done along with governance, not delayed until next year.
Federated Farmers dairy chairman Andrew Hoggard said he had reservations about the proposed loosening of farmer director eligibility criteria.
«I want the majority of people on that board table to have been where I am, to understand that if it all turns pear-shaped, it’s not just about an investment that’s gone bad, that this is our livelihoods, our homes.
«Taking off my federation hat and speaking as a Fonterra shareholder I wonder whether we need to ensure the test is also a bit stronger for shareholder councillors. Because these guys would have the veto power (over farmer director candidates). They would be the ones to say ‘we don’t have six or seven people on the board who know what it is to be a farmer’.»
Source: Stuff
