Farmer-shareholder bid irks Fonterra
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