Fonterra's farmers to vote on four directors after process to address 'skills matrix
By Jonathan Underhill
Oct. 12 (BusinessDesk) - Fonterra Cooperative Group shareholders will vote on four new directors - one-third of the
board - after the dairy company's exhaustive new selection process that rates candidates against a 'skills matrix'.
Shareholders will be asked to ratify the appointment of Bruce Hassall as an independent director at the company's annual
meeting in Hawera on Nov. 2. He replaces David Jackson, one of the four independents on the 13-member board (one seat is
vacant), who retires at the AGM.
Voting has already opened for the other three farmer-shareholders whose nominations have been evaluated by an
independent selection panel. To make it to the ballot, they needed to score highest against the board's skills and
attributes priorities in a process signed off on by the Shareholders' Council. They must also embark on a roadshow,
visiting seven locations around the country this month. To make it to the board they need to get more than 50 percent of
The board's 2017 matrix of 10 skills, unsurprisingly shows the existing board members score highly for in-depth dairy
farming experience and understanding of the industry, value drivers of the milk price and profit. But on financial
experience, global consumer experience and global experience/understanding, the current board only just meet the
required skill level and on seven skills they fall short of the desired level.
The current board scored lowest on technology strategy and governance and global consumer experience. The third-lowest
score came for chief executive experience of a large operating business, and fourth-lowest on risk management
experience. The independent selection panel was chaired by Alison Paterson, a seasoned veteran of New Zealand private
and public sector boards who was made a Dame Companion of the New Zealand Order of Merit for her services to business in
2014. The other two members were John Spencer, another boardroom veteran and a former chief executive of NZ Dairy Group,
and Tony Carter, whose current duties include being chair of Air New Zealand and Fisher & Paykel Healthcare.
Those that made it to the ballot paper are Taranaki-born Brent Goldsack, a partner of accounting firm PwC until last
month who has been involved in three Waikato dairy operations in the past eight years. For the board's 2017 priority
list, the chartered accountant scored highest for experience working for a global firm, financial know-how and his
understanding of risk management. He doesn't have global manufacturing or consumer experience.
Ashburton-based Andy MacFarlane, who combines farming with an agricultural consultancy business, has travelled
extensively to study farming systems, and has worked with ANZCO's food & solutions business and the deer industry. He is also a councillor of Lincoln University and a director of AgResearch,
Ngai Tahu Farming and ANZCO.
The third candidate is John Monaghan, a current board member and former chair of the Shareholders' Council. The panel
rated him highly for his "strong understanding of the global complexities of Fonterra’s operations around the world" and
noted that he John regularly represents the company overseas and has visiting most of its markets. He grew up on a farm
and has 40 years experience running and owning dairy farm operations.
Voting closes on Oct. 31. Being on the ballot doesn't guarantee a board seat as shareholders could vote no to all three
- forcing a new round of selections. The three candidates fill empty board seats, after Michael Spaans stepped down in
January due to ill health and former director Ian Farrelly stepped in as a temporary replacement.
David McLeod, who is up for re-election by rotation, has elected to retire after six years on the board, while one-term
director Leonie Guiney, also up for re-election, was unsuccessful in getting through the new selection process, which is
in its second year.
In 2016, a majority of shareholders voted to shrink the board to nine from 13 although the vote fell short of the 75
percent requirement. There was strong support for improving the selection process to ensure New Zealand's biggest
company has the right skill mix among its directors. At the start of 2016, Fonterra kicked off a governance review,
posing the question of whether a board stacked with farmers had the right skills to drive a global business.
Fonterra hadn't changed its governance and representation arrangements since being set up 16 years ago although it
undertook a full review in 2013.
Units in the Fonterra Shareholders' Fund, which are entitled to dividend payments from the ordinary shares, last traded
at $6.15 and have gained 2.3 percent this year.