The appointment of a heavy-hitting commercial board dominated by independent directors to head the company that will manage Fonterra’s new shareholders’ fund has refreshed farmer fears they could lose ownership of their co-operative to the sharemarket.
The dairy giant has announced former PwC chairman John Shewan will head a five-person board for the Fonterra Shareholders’ Fund, which includes just one farmer-elected director.
Fonterra said in future three directors would be elected by unit holders in the fund and two by Fonterra.
Shewan’s colleagues at the top table will be Pip Dunphy (independent); Kim Ellis (independent); Sir Ralph Norris, a non-farmer Fonterra appointed director; and Jim van der Poel, a Waikato farmer-director of Fonterra.
Fonterra chairman Sir Henry van der Heyden said governance of the fund at the time of its launch was likely to be «closely scrutinised» by farmer-shareholders and potential investors.
No comment was available from farmer watchdog the Fonterra Shareholders Council.
Fonterra TAF project leader Mike Cronin said the makeup of the fund manager’s board had been in all TAF material available to farmers this year.
But Canterbury dairy farmer and anti-TAF campaigner Leonie Guiney said few farmers would be aware of the «fine print» and it was «critical» shareholders watched the evolving TAF situation very closely to ensure continued farmer control was delivered as promised by van der Heyden.
Under TAF, set for launch next month before Fonterra’s annual meeting in December, the public will be offered NZX-listed, dividend-carrying units in farmer-held Fonterra shares.
The fund will administer the arrangement, which farmers narrowly voted amid fears it is the first step to Fonterra’s demutualisation with farmers losing control and ownership of the co-operative.
Guiney said the name of the fund board was a misnomer because there was only one farmer director on it.
History had shown that the second step in demutualisation of a co-operative after outside capital was introduced, was a reduction in farmer-directors.
Van der Heyden had recently told farmers that Fonterra’s governance needed «strengthening», Guiney said.
Van der Heyden could not be contacted for comment.
Cronin said unit holders would decide the majority of directors on future fund boards because «it has always been important to farmers that for 100 per cent control and ownership, the fund is separate from Fonterra [behind a firewall].»
The fund board would be totally independent but Fonterra had retained the right to have two seats to ensure good information flows between the fund and Fonterra to support proper operation of the fund market and a separate farmer trading market, he said.