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Fonterra’s Final Proposal Date For Governance Reform Is A Mystery
May 13, 2016

Some Fonterra shareholders have been told to expect to see the final proposal for governance reform this weekend- but someone may have let the cat out of the bag too soon.

Fonterra’s farmer council chairman Duncan Coull will not comment on May 15 being the publishing date for the final proposal, as stated in an update from Fonterra Raikaia ward representatives to shareholders.

Their note says after the publication, farmers will be asked to vote on the reform proposal, which follows a review of the big dairy co-operative’s governance and representation structures and processes.

Asked to confirm the release date, Coull texted that the review committee would determine the date, not him, “and when they do they will communicate to shareholders and stakeholders alike”.

A Fonterra spokesman said the board-council committee overseeing the governance review had not yet given a date for the release of the final proposal. He could not comment on where the Fonterra Raikaia area representative and councillor who co-signed the advisory had got the May 15 date.

The review follows a 54-per-cent vote of farmer-shareholder support for a remit calling for a review and reduction in Fonterra’s board size at November’s annual meeting.

The recommendations of a preliminary proposal published in April included reducing the board from 13 to 11 members, a majority of six farmer-elected directors, a new appointment process to replace the current single transparent vote election system for farmer-directors, and changing eligibility rules for farmer-directors to include equity and company farm ownership partners. A review of representation – the council – was to be delayed until next year.

Some of the recommendations have struck major opposition from farmers and it is understood the shareholders’ council has been meeting regularly since to try to iron out wrinkles raised in feedback. The advisory to Raikaia shareholders suggests a target timetable before the council hit snags in its internal debate.

The Fonterra spokesman said a Sunday May 15 release of the document to farmers would not sit comfortably with Fonterra’s obligations to inform the sharemarket.

The company offers public investors dividend-carrying units in Fonterra farmer-owned shares.

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The review is the first to reach a published proposal stage since the farmer-owned company was created 15 years ago from an industry mega-merger.

A campaign last year by former directors Greg Gent and Colin Armer called for the board to be cut to nine directors to improve efficiency and decision-making. The pair cited serious supply loss to competitors and an unacceptable level of commercial performance.

The board and council voted against their remit to the annual meeting. Although the 54-per-cent vote of farmer support for it was not enough to get the constitution changed, it sent a strong message for reform to the board.

Gent and Armer in a submission on the draft proposal said shareholders’ wishes were being treated with “arrogance”.

They said farmers had voted for a much smaller board than the proposal recommended.


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