Fon­terra CEO pay re­mains a mys­tery

Waikato Times - - News - Re­becca Steven­son and John An­thony

Fon­terra’s new chief ex­ec­u­tive Miles Hur­rell is earn­ing ‘‘sub­stan­tially less’’ than his pre­de­ces­sor Theo Spier­ings.

At Fon­terra’s an­nual meet­ing in Pu­taruru yes­ter­day, share­hold­ers, frus­trated with the co­op­er­a­tive’s re­cent un­der­per­for­mance, quickly fo­cused their ques­tions on re­mu­ner­a­tion.

Spier­ings, Fon­terra’s for­mer chief ex­ec­u­tive, left the com­pany this year with a fi­nal year’s salary of $8.08 mil­lion – mak­ing him one of the coun­try’s high­est paid ex­ec­u­tives.

Share­hold­ers asked what Hur­rell was paid but the ques­tions went unan­swered, other than Fon­terra chair­man John Mon­aghan stat­ing Hur­rell’s re­mu­ner­a­tion was ‘‘sub­stan­tially less’’.

Share­hold­ers wanted to know what ac­count­abil­ity Spier­ings faced for not de­liv­er­ing ac­cept­able re­sults but Mon­aghan failed to an­swer the ques­tion.

Pub­licly listed com­pa­nies usu­ally out­line staff re­mu­ner­a­tion de­tails in their an­nual fi­nan­cial re­sults. That be­ing the case, Hur­rell’s pay packet will not be known un­til Au­gust next year.

Mon­aghan said ‘‘there are no sa­cred cows’’ when it comes to im­prov­ing fi­nan­cial per­for­mance and Fon­terra would need to di­vest as­sets to pro­tect its bal­ance sheet.

Ad­dress­ing the meet­ing, Mon­aghan said Fon­terra had made progress on a re­view it promised when it de­liv­ered its fi­nan­cial re­sults in Au­gust.

For the first time the dairy giant made a loss, run­ning up a $196m deficit for the year.

The co-op is re­duc­ing its debt lev­els by $800m to pro­tect the bal­ance sheet.

About 300 farmer-share­hold­ers at­tended the meet­ing.

Mon­aghan said the far­m­gate milk price of $6.69 per kilo­gram of milk­solids was the third high­est in a decade, de­spite the loss.

He said the co-op­er­a­tive board had made progress with its re­view. The first stage was to iden­tify as­sets that are no longer core to its strat­egy in terms of the type of prod­uct they make or the ge­og­ra­phy in which they op­er­ate.

The sec­ond part was a strate­gic re­view of its full port­fo­lio, and the third and fi­nal stage of the re­view was to act on the wider plan but there would be no ‘‘fire sale’’ of as­sets, he said.

‘‘This may mean ex­it­ing cer­tain in­vest­ments that are no longer core to our strat­egy, re­al­lo­cat­ing cap­i­tal to new or ex­ist­ing ven­tures, or sim­ply re­duc­ing debt . . . We have some tough de­ci­sions to make.’’

In­vest­ment bank Gold­man Sachs had been ap­pointed to re­view op­tions with its dis­as­trous share­hold­ing in Be­ing­mate, the as­sem­bled farm­ers were told.

Hur­rell painted a bleak pic­ture of Fon­terra’s China Farms op­er­a­tion. He said China Farms posted a loss of $9m for the year, while its in­gre­di­ents busi­ness made a $30m loss from buy­ing milk from the farms and pro­duc­tion was down 12 per cent.

Fon­terra re­mained com­mit­ted to its ‘‘global milk pools’’ – a con­cept that had cre­ated con­fu­sion for farmer-share­hold­ers, he said.

‘‘We have some tough de­ci­sions to make.’’ Chair­man John Mon­aghan


Newly ap­pointed Fon­terra chief ex­ec­u­tive Miles Hur­rell is paid ‘‘sub­stan­tially less’’ than Theo Spier­ings’ $8 mil­lion – but the fig­ure is se­cret.

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