Most milkers vote for trim

Former directors Greg Gent (front left) and Colin Armer (right) at the Fonterra annual meeting put their proposal to reduce the milk giant's board from 13 to nine directors so the new "fit and lean" culture which brought staff reductions this year is carried through to top management. Photo / Supplied

A majority vote for reducing Fonterra's board size has dairying advocates determined to reduce upper-level bloat, reports Mike Barrington

Fonterra directors have been given a strong message to carry out a governance review promised three years ago.

The review was pulled from the sidelines to help the directors and Shareholders Council oppose a proposal to reduce the size of the Fonterra board from 13 to nine which former directors Greg Gent and Colin Armer put to the co-operative's annual meeting at Waitoa on November 24.

While the 53.8 per cent support it, the proposal received from shareholders was short of the 75 per cent required to change the constitution. Gent and Armer were satisfied they had got their point across.

"This is a huge success for us," Mr Gent said. "We had little resources and the company worked hard against us."

The former directors, who had got tired of waiting for the governance review promised in 2012, suggested trimming back to nine directors would improve board efficiency and decision-making.

"In recent times staff have been reduced as management has been trying to create a fitter and leaner Fonterra," Mr Gent said.

"We think that sort of cultural alignment should be carried through to the top level. Thirteen is a huge number for a modern board."

The former directors held farmer meetings around the country and explained their proposal in the 1000 words they were permitted in the notice of meeting.

Fonterra chairman John Wilson told the Northern Advocate governance and representation had been important to the board and Shareholders' Council before the precautionary recall in 2013 and the 1080 contamination scare earlier this year.

The work was largely done at that time to consult with farmers, but those discussions had been put on hold until the recall and 1080 issues were under control.

"More recently, providing governance stability during the significant business transformation and having all focus on delivering money out of the business for our farmers at such a challenging time has had to be the absolute priority," Mr Wilson said.

"We committed some months back to completing the work and consulting with farmers in early 2016."

Information packs would be sent to farmers next month, with farmer meetings to follow in February, Mr Wilson said.

In March, farmer feedback would be incorporated into a preferred recommendation which would be consulted with farmers through April and May, ahead of fine tuning a final recommendation to be put to a special meeting of Fonterra in May or June.

Mr Gent said that he and Mr Armer had achieved what they wanted to.

"While we'd love to have got our proposal over the 75 per cent line we always knew that it was a huge mountain to climb," he said.

"The company has far better resources than us to communicate with its 10,000 shareholders."

Mr Armer said the Trading Amongst Farmers proposal got 66 per cent support with millions of dollars spent on promoting it so he and Mr Gent were thrilled with the support they had received.

"Something has to happen now," Mr Armer said. "The whole thing disappeared three years ago but there is nowhere for the board to hide now.

"The resurrection of the governance review after three years was a last minute jack-up between the council and the board which had only one purpose - to defeat our proposal."

Mr Armer said the governance review was still inadequate.

"This upcoming review needs independence, experience and farmer input into its terms of reference," he said. "Right now shareholders don't know the terms of reference and the review is being conducted by a group that lacks the experience or independence needed to make sure we get the right structures into the future."