Peters slams Fonterra ‘fat cat’ pay

NZ First leader Winston Peters says Fonterra chief executive Theo Spierings’ remuneration shows why there needs to be a ‘‘say-onpay’’ law, which would give shareholders the right to hold executives to account.

However, Strategic Pay chief executive John McGill, who analyses executive pay, said Spierings’ pay needed to be compared with compensation for overseas chief executives because there was no other company in New Zealand as big as Fonterra.

Peters said in a statement: ‘‘Fat cat payouts for doing their day job. Here’s a boss who is paid $2.46m but who forwent a $1.83m bonus during one of Fonterra’s worst ever payout years.

‘‘Now, during what is an average season, he has not only won that bonus back but secured a $3.85m cherry on top with another $170,000 for superannuation.

‘‘Shareholders need to be reminded that their payout of $6.52 per kilogram of milksolids this season is well under what they got in real terms for the final two seasons before Mr Spierings came onto the management scene.’’

Spierings is not the only big earner in New Zealand’s largest company, with 25 other executives receiving more than $1m for their efforts. Of those, five left the company during the year.

Spierings’ total package appears to put him in the number one slot among New Zealand chief executives.

Former SkyCity Entertainment Group chief executive Nigel Morrison received $6.4m in 2016, but that was made up of a base salary plus dividends and leave entitlements, while former Fletcher Building chief executive Mark Adamson was given $4.7m.

In 2015, there was an outcry until Spierings finally requested the freeze for the 2015-16 year, amid losses of more than 700 staff.

However, this year he was being rewarded for big gains in the added-value part of Fonterra’s business.

In a New Zealand context, Spierings is very well paid, but judged against the CEO packages of similar multinational companies, he is not at the highest end.

Last year Fonterra had a turnover of $19.2 billion. The world’s largest dairy company, Nestle, had a turnover of $33b, and in 2916 its chief executive received $15.9m.

Danone’s turnover was $25.1b and its chief executive, Emmanuel Faber, earned $7.8m.

McGill said if chief executives did not perform they often fell on their sword, as happened to Adamson recently when Fletcher Building posted a poor return.

Otago University accounting lecturer Helen Roberts said that when compared with the median wage, our top bosses are earning cash compensation of about 15 times the typical worker’s pay.

‘‘If you look at $8.3m and say a worker’s median income this year is $50,000, [Spierings is] earning about 166 times more.’’

On the other hand, the size of the company was a factor.

‘‘You want to employ someone with the skill set that can manage the assets they are being entrusted with,’’ Roberts said.

The ‘‘say-on-pay’’ movement has enjoyed some success overseas. In April, BP cut its chief’s pay by 40 per cent to $11.6m to avoid shareholder revolt, and last year Commonwealth Bank of Australia shareholders forced a backdown over CEO Ian Narev’s pay deal.

Fonterra on Monday released its latest annual report, posting an after-tax profit of $745m, down 11 per cent on last year.