Fonterra’s former CEO pocketed $43 million

Fonterra’s former chief executive Theo Spierings pocketed $43 million in his time in the job, based on a new payment disclosure from the embattled dairy company.

The company has disclosed that Spierings received an incentive payment of $4.67m when he left the job in August last year, despite Fonterra’s huge financial losses.

This took his total pay during seven years as chief executive to $43m. Fonterra has revealed the final payment ahead of its scheduled disclosure in the upcoming 2019 annual report under pressure for more information, triggered by a Herald report that Spierings was in line for another payout under a historic incentive scheme.

The company said it had made more detail available to its farmer-shareholders and was now extending that to the public. Fonterra has just announced an expected loss of $590m to $675m this year and asset writedowns of about $820m to $860m. It will not pay a dividend.

In a statement Fonterra said the final payment to Spierings was made under the Velocity Leadership Incentive, a long-term incentive plan in place in the 2016 and 2017 financial years. The plan had been discontinued.

Employees who led significant work streams in support of the Velocity project were eligible to participate in the incentive plan.

Under the arrangement, 50 per cent of the incentive was paid out at the end of the 2017 financial year, 25 per cent the following year and the balance this year.

Fonterra said Spierings’ final remuneration included his base salary, superannuation contributions, holiday pay entitlement and short-term incentive payments. The total was $4,673,359. Spierings collected $8m in 2018, adding to the $8.3m he received in 2017.

The company’s new long-term incentive plans were primarily based on return on capital and earnings per share metrics. The board retained overall discretion on all aspects of the incentive plans. Fonterra’s latest loss forecast follows a historic first annual loss last year of $196m after operating earnings fell 25 per cent and a $433m loss on its investment in Chinese company Beingmate.