Farmer-share­holder bid irks Fon­terra

South Waikato News - - RURAL DELIVERY -

Fon­terra’s board, deal­ing with in­ter­nal di­vi­sion and grow­ing farmer un­ease about gov­er­nance, has crit­i­cised two share­hold­ers for pre­sent­ing a res­o­lu­tion for next month’s an­nual meet­ing, seek­ing to ce­ment farmer rep­re­sen­ta­tion on the board.

In a no­tice of an­nual meet­ing posted on the NZX, the board said it did not sup­port the pro­pos­als and rec­om­mends share­hold­ers vote against them.

Lach­lan McKen­zie’s res­o­lu­tion, sup­ported by South Is­land share­holder Ann Jones, pro­poses en­shrin­ing in Fon­terra’s con­sti­tu­tion a min­i­mum of nine farmer-elected direc­tors on the board, and that only farmer direc­tors can elect the chair­man.

The Fon­terra Share­hold­ers Coun­cil, which rep­re­sents the in­ter­ests of Fon­terra’s 10,500 farmer-own­ers, also does not sup­port the res­o­lu­tion, say­ing it pre­empts a gov­er­nance re­view un­der way at Fon­terra.

McKen­zie said the no­tice com­ment was ‘‘the board try­ing to sti­fle de­bate’’.

‘‘The board is crit­i­cis­ing me in­stead of say­ing it is a good idea or not.’’

Fon­terra’s le­gal coun­sel David Matthews said the board meant that Fon­terra as a co-op­er­a­tive had a ‘‘well-re­sourced’’ struc­ture in place to re­ceive, dis­cuss, an­a­lyse and con­sult on share­holder con­cerns.

This was the share­holder coun­cil. The coun­cil is funded by farm­ers.

‘‘If ev­ery­one put for­ward their res­o­lu­tions (out­side the coun­cil) it could have a po­ten­tially chaotic out­come,’’ Mr Matthews said.

The board also wrote the McKen­zie pro­posal pre­empts the gov­er­nance and rep­re­sen­ta­tion re­view.

The joint com­pa­ny­coun­cil re­view was started at least six months ago.

McKen­zie and Jones’ pro­pos­als fol­low a more than two-year bruis­ing de­bate in the co-op­er­a­tive over the in­tro­duc­tion of share trad­ing among farm­ers (TAF), which was nar­rowly voted in by farm­ers in June.

The an­nual meet­ing is on De­cem­ber 17 in Hamil­ton.

Mean­while, Fon­terra chair­man-elect John Wil­son says he has ‘‘no idea’’ whether his chances of re­elec­tion as a di­rec­tor next month are be­ing eroded amid claims of grow­ing farmer un­ease about gov­er­nance stan­dards at the dairy gi­ant.

Farmer-di­rec­tor Wil­son is seek­ing re-elec­tion to the board along with fel­low in­cum­bent Ni­cola Shad­bolt, and nine other farmer can­di­dates vy­ing for three board seats.

Wil­son, a Waikato farmer, was re­cently named by the board as suc­ces­sor to chair­man Sir Henry van der Hey­den. It is now widely known among share­hold­ers of the farmer-owned co­op­er­a­tive that the vote was not unan­i­mous.

The third va­cancy in next month’s elec­tion was cre­ated when farmerdi­rec­tor Colin Armer quit af­ter Wil­son was an­nounced as chair­man-elect.

Wil­son’s elec­tion came as the co-op­er­a­tive was still lick­ing its wounds af­ter a bruis­ing de­bate over the van der Hey­den-driven in­tro­duc­tion of TAF.

Then came the news that van der Hey­den would stay on the board for an un­spec­i­fied time, and that a gov­er­nance re­view was un­der way. Op­po­nents of TAF see an­other threat to farmer con­trol in the re­view, with one op­tion be­ing the re­duc­tion of farmer direc­tors and an in­crease in in­de­pen­dent ap­pointed gov­er­nors.

Wil­son con­firmed he at­tended a meet­ing of share­hold­ers in Ash­bur­ton last week where con­cerns about gov­er­nance dom­i­nated. It is un­der­stood farm­ers de­manded a date when van der Hey­den would step down.

Wil­son said he would not dis­cuss a farmer meet­ing, and would not com­ment on his un­der­stand­ing of the level of con­cern about cur­rent gov­er­nance.

Fon­terra’s ex­pla­na­tion for van der Hey­den and in­de­pen­dent di­rec­tor Ralph Wa­ters stay­ing on af­ter next month’s an­nual meet­ing was ‘‘con­ti­nu­ity’’, as there was po­ten­tial for five new direc­tors when the ink was barely dry on TAF.

Wil­son said while the board had ‘‘ab­so­lute con­fi­dence’’ it had TAF and its me­chan­ics right, the cap­i­tal re­struc­ture was unique.

‘‘There might be some­thing un­fore­seen so ex­pe­ri­ence is crit­i­cal.

‘‘It is best to have as many direc­tors hav­ing signed the prospec­tus there as TAF goes for­ward.’’

Wil­son said the May board meet­ing was likely to be van der Hey­den’s last, and Wa­ters would prob­a­bly be re­placed within six months. Fairfax NZ

Sir Henry van der Hey­den

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