Fonterra wants to know what its farmer shareholders think of a smaller board reduced by two directors.
The co-operative’s initial thinking of shrinking the director count from 11 down to nine directors was laid out in an open email to the shareholders by chairman Peter McBride on the NZX stock exchange.
Under this plan, six farmer-elected directors would be retained and only three appointed directors would be carried.
The chairman would continue to be selected from the pool of farmer-elected directors.
Mr McBride said the board believed it was the right time to review its size and composition as the co-operative had put the capital structure review, asset divestment programme and long term strategy work largely behind it.
"Top line, we believe the board priorities for the coming years could be more efficiently delivered by a smaller board."
His experience of leading or being part of leadership groups was that people were more engaged and able to share their perspectives in smaller groups, he said.
"Smaller groups encourage greater sharing of dissenting ideas and opinions — which is a good thing — and are proven to support faster, robust decision making. Having now been part of the co-op’s board for five years, the last three as chair, I’m confident that reducing the size of our board will improve the dynamics within the group, encouraging greater participation from directors and maintaining access to the necessary skills and experience to govern the co-op into the future."
Fonterra wants to increase efficiency and avoid group think while retaining boardroom skills and capabilities.
The board has begun consulting with the Co-operative Council and will seek farmer feedback during roadshows before its annual meeting.
Fonterra’s annual results announced last week revealed a record profit after tax of $1.6 billion (up $994 million), including its one-off sale of Soprole, for the financial year ending July; shareholders are being paid a record dividend.
A final milk price of $8.22 a kilogram of milksolids was confirmed for the 2022-23 season, while this season’s forecasted range was retained at $6/kg to $7.50/kg, with a midpoint of $6.75/kg.
