Revamped Fonterra to be ‘more capital-efficient’
Fonterra chair Peter McBride says the divestment of Mainland Group is their last significant asset sale and signals the end of structural changes.
In an email to farmer shareholders, Fonterra chair Peter McBride recommends reducing the board size from 11 to nine.
However, farmer shareholders will remain in control of the board. The current balance between farmer elected and appointed directors would be maintained - with a composition of six farmer elected directors and three appointed directors.
“As is the case today, the chairman would still be selected from within the pool of farmer elected directors,” says McBride.
The proposal is being discussed with Fonterra Co-operative Council and board members will brief shareholders during a round of farmer meetings later this month. A vote will be taken at the co-op’s annual general meeting in November.
McBride says as part of earlier governance and representation reviews, a commitment was made to review the board size and composition in 2024.
“Since the co-op’s formation it has been envisaged that the board size would be rationalised over time.
“With the capital structure review, asset divestment programme and long-term strategy work largely behind us, the board believes it is the right time to review its size and
composition.”
The Fonterra board believes the co-op’s priorities for the coming years could be more efficiently delivered by a smaller board.
“My personal experience leading or being part of leadership groups is that in smaller groups people are more engaged and able to share their perspectives in a more meaningful way,” says McBride.
“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 withing the group, encouraging greater participation from directors, and maintaining access to the necessary skills and experience to govern the co-op into the future.”
He points out that when thinking about the right size of the board, that balance is important.
“We want to increase efficiency and avoid ‘group think’ whilst retaining an appropriate level of skills and capabilities, as defined by our board skills matrix.”
