Spierings’ salary freeze offer ‘too late’
Fonterra boss Theo Spierings’ salary has been frozen at his own request, but he will still qualify for major bonuses on top of his salary.
Spierings requested the freeze for the 2015-16 year at a meeting of the company’s people, culture and safety committee on September 21.
That was the same day Fonterra confirmed 230 more jobs were going, adding to the 523 staff made redundant in July.
Spierings’ total earnings for the year to July 31 were at least $4.93 million, representing a pay rise of about $770,000.
The freeze will only apply to his base salary and he will still be eligible for short and long-term ‘‘incentive’’ payments.
Unusually for a major company, the dairy co-operative only publishes Spierings’ total remuneration, without splitting out bonuses from fixed salary.
It is not uncommon for such bonuses to make up more than half of top executives’ total pay.
A Fonterra spokesman said Spierings’ salary was based on independent, international benchmarking.
While it was in the top band for New Zealand chief executive salaries, that was to be expected considering Fonterra was New Zealand’s ‘‘largest and only truly global company’’, he said.
Federated Farmers dairy vice chairman Chris Lewis said timing was everything in public relation.
‘‘You would have thought these conversations may have been had a few months ago, realising the sensitivity of the staff layoffs, low payout, and all of that,’’ he said.
Lewis said farmers expected the board to employ a top CEO to deliver top performance.
‘‘If he’s worth every bit of that, farmers will not complain.’’
Labour Primary Industries spokesman Damien O’Connor said Spierings acting to acknowledge the pain felt by farmers and Fonterra employees was positive.
He did not want to pass judgment on the size of the CEO’s pay packet, except that it should be reflective of the company’s success.
‘‘If he makes mistakes, then he should carry the can and be fired, if they’re significant.’’
New Zealand First leader Winston Peters said Spierings talked a good game but was ‘‘no hero’’. He said the net profit ‘‘trumpeted’’ last month was substantially less than what Fonterra had delivered in 2012, Spierings’ first year as CEO.
However, Morrinsville farmer and former Federated Farmers Waikato president Lloyd Downing said Spierings’ pay reflected his responsibilities.
Fonterra’s value-added business was worth $7 billion, and since 2012 the company had increased production by 22 per cent yet held costs, Downing said.
‘‘It does seem insane, when you drive through Otara and poor buggers can hardly put food on their flaming plate while others are earning hundreds and even million of dollars, but Theo can make a decision and save his company more than his salary if he makes the right decision,’’ Downing said.
Morrinsville Federated Farmers chairman Stu Husband agreed with Lewis that politically the news was poorly timed.
‘‘If he had come out with that about six weeks ago before the job cuts announcement it would politically have been so much better. It would have been ‘what a great guy’,’’ Husband said.
As it was, he said it appeared Spierings’ decision came about because of pressure.
Spierings’ $4.93m haul makes him the highest-paid executive in the country.
His self-imposed salary freeze, which is only linked to his base pay, is unlikely to see him relinquish the top spot.
However, ANZ’s David Hisco may re-take the throne when his own salary is revealed next month. The boss of the country’s biggest bank earned $4.22m last year, or 120 times as much as the lowest paid bank worker.
IAG NZ boss Jacki Johnson is also a strong contender, although her pay dropped to $4.1m this year.
Fletcher Building’s Mark Adamson recently passed the $4m milestone, and several other company bosses are not far behind.
While executives have received hearty pay rises in recent years, they are yet to return to the heady days of 2010, when several earned more than $5m.
Among them was Spierings’ predecessor Andrew Ferrier, who received a staggering $8.2m golden handshake when he left the dairy giant in 2011.