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Fonterra wants to cut board numbers

NZN 13/04/2016 By Fiona Rotherham

Fonterra is proposing cutting two of its board numbers as part of the first governance overhaul since it was established 15 years ago.

A booklet on the first draft proposal from the long-awaited review of the farmer-owned dairy co-operative is being sent out to farmers and a final recommendation is to go to shareholder vote in late May or early June.

It wants to cut the board two to 11 and having a single process for electing farmer appointed and independent directors.

A majority of Fonterra's farmer shareholders supported a proposal to reduce the board to nine from 13 at the annual meeting last October but the vote fell short of the 75 per cent needed.

It backed the board's view that a better option was to make any changes through the governance review that first started in 2013 and was then stalled until shareholders started agitating for change last year.

Fonterra chair John Wilson said he's hoping farmers will support the draft proposal which stops short of cutting the board as much as some wanted but is aimed at ensuring it has people of the best capability and quality.

There had been criticism some board and council members were simply "passengers".

Mr Wilson said feedback was that the process for electing farmer representatives was too politicised and they struggled to get the information on candidates they needed to make good quality decisions on who to vote for.

Under the draft proposal farmers will still comprise the majority of the board with six representatives compared to the current nine, and the chair will continue to be a farmer representative.

Three independent directors are required by law and the remaining two director spots could be either farmer or independent representatives depending on the skills required.

Units in the Fonterra Shareholders' Fund, which gives outside investors access to the dairy co-operative's revenue stream, advanced 0.9 per cent to $5.72.

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