It’s time to change a few things

Executive pay packets and shareholder meetings are a good place to start, national business editor Ellen Read writes.

So Fonterra boss Theo Spierings’ remuneration package was $8.3 million for 2017. Notice I didn’t say he earned $8.3 million - as that’s the heart of this issue. Did he earn it and what does ‘‘earning’’ it look like? Who did he ‘‘earn’’ it for … farmers, New Zealand, himself?

While I struggle with any one person receiving that much (I know it’s modest globally), dairy is our second largest export earner, bringing in a quarter of the money we earn from exports each and contributing about $8 billion (or 3 per cent) of our GDP, so it figures that you’d want someone pretty good at the helm. More than pretty good.

ASB rural economist Nathan Penny says farmers will be pretty happy with Fonterra’s performance as ‘‘they’ve been paid considerably more for their milk, while only seeing a modest fall in the profits of the company they also own’’.

That said, he adds that the current financial year will be a better test of the co-operative’s performance given that Fonterra expects to make a similar profit (despite rising milk prices).

This makes me think, if Spierings earned over $8m this year, what on earth is he in store for next time?

Federated Farmers vice president, and Fonterra farmer, Andrew Hoggard says it’s a matter for shareholders and nobody else.

I disagree. As the country’s largest business then it sets a precedent. Fonterra may be a global company but it needs to be a New Zealand citizen.

Quite what that would look like (eg, NZ First leader Winston Peter’s shareholders’ say-on-pay suggestion) is something that needs to be canvassed

Should New Zealand have a system where any bosses pay packet is capped? If so how would you measure that, would we attract the right kind of people?

While Peters is still holding his king/queen maker cards close, a new group of MPs begin drawing a parliamentary salary this week. They will be paid at least $160,000 each per annum – roughly what Spierings would receive each week if the $8.3m was just cash salary (not a more complicated makeup of incentives).

What rates more highly – someone bringing in the dollars, or someone deciding how a large part of them will be spent? Why the disconnect? Should people have to expect less money (although, realistically, it’s still a lot) when they enter a public service role? What if we flipped it the other way around?

Should we be rethinking some other processes and practices?

Take listed company annual meetings, for example, governed by NZX listing rules.

I went to the Genesis annual meeting recently and it was an outdated and, dare i say it, irrelevant event.

While board chairman, former National Party prime minister Dame Jenny Shipley, discharged her duties admirably, reading the formal resolutions with great solemnity and giving the 200 shareholders gathered time to mark their ballot papers, proxies already received were then flashed up on the screen showing the decision was already made.

It kind of feels a bit like that with Spierings’ pay. I have no doubt the shareholders will argue the point loudly at the cooperative’s annual meeting of farmer shareholders but he’s already banked the money.

Air New Zealand’s annual shareholder meeting, which I also attended, put the proxy votes up before the few hundred shareholder who attended voted, and while the outcome was the same (ie, a foregone conclusion to elect former prime minister Sir John Key to the board) it felt more transparent to me.

Still a silly process though. That’s not Genesis or Air New Zealand’s fault. It’s the outdated NZX rules they must follow.

Rules that, along with others, need a shake up.