Fonterra boss takes pay cut worth as much as $360,000

Andrew Ferrier. Photo / Kenny Rodger

Fonterra's highest-paid employee - likely to be chief executive Andrew Ferrier - appears to have taken a pay cut of up to $360,000.

The dairy co-operative, which is New Zealand's largest company, yesterday released its 2009 annual report revealing its highest-paid New Zealand employee received between $3.62 million and $3.63 million in the year to July 2009.

That was down on the $3.98 million he is likely to have been paid last year but remains higher than the $3.37 million paid to the top earner in 2007.

Fonterra announced a pay freeze for Ferrier and eight other executives in June in a bid to cut costs in the face of the tougher economic environment. The freeze was set to last until October 2010.

At the time Ferrier said it was a signal to farmers, who faced a significant drop in income this season, that they were "in this together".

Fonterra's forecast payout to farmers for 2009/10 was $4.55 a kilogram of milk-solids, down from the prediction for 2008/09 of $5.20 a kg.

Fonterra group general manager of human resources Jennifer Kerr said she could not talk about the specifics of individual pay but that a significant amount of remuneration was based on achieving performance targets, so the total would vary from year to year.

Executive pay for the 2008/09 year was based on performance in the previous year.

The cut is in stark contrast to top listed company Telecom, which maintained the pay of its chief executive, Paul Reynolds, despite a fall in profits.

Ferrier's salary pales in comparison with Reynolds' package worth more than $5 million this year. On top of his $1.75 million base salary, Reynolds will get a performance incentive of $3.062 million and will also receive special payment for his family to travel to and from Britain.

But Ferrier is not the only executive to see his pay packet shrink. Fletcher Building chief executive Jonathan Ling also took a hit this year after he failed to meet performance goals. His pay slipped from $1.76 million to $1.24 million.