Dairy power
OPINION: The good times felt across the dairy sector weren't lost at last week's Beef + Lamb NZ annual meeting.
Chair Andrew Morrison and his fellow directors will find themselves under the gun from levypayers over a resolution on the agenda to substantially increase director fees for both Beef+Lamb and the Meat Board.
As Morrison has conceded, “directors’ fees are always closely scrutinised” and you can bet it will be a hot topic of discussion at the meeting.
It can be argued, and Morrison vigorously has, that the proposed increase in director remuneration is justifiable. However, one can seriously question both the process and optics in the way the board has made its decision.
The disestablishment of the Directors Independent Remuneration Committee (DIRC), an independent body that recommends any changes in director remuneration, looks self-serving. The DIRC was established under previous chair James Parsons and was a sound move bringing Beef+Lamb NZ in line with how many other farmer-owned organisations operate – including DairyNZ and Fonterra.
Morrison claims the board decided to do away with the DIRC because the directors agreed that the best approach was for themselves to actively take ownership of remuneration recommendations.
Really?
Meanwhile, the argument that the board sought ‘independent advice’ on the fee increases also rings hollow. The board hired consultants – at what price, they refuse to say – who then proceeded to recommend a healthy pay increase for directors. It is hard to view this advice as very ‘independent’.
Then we get to the actual director fee increases themselves. The Meat Board alone sees a 38% jump in the chair’s annual remuneration and a 23% increase in all the other directors’ fees. On what planet do Morrison and company reside if they think that kind of hike is appropriate?
How many sheep and beef farmers are expecting an increase in income of 23% this year?
For Morrison to try and justify this leap in remuneration because of the ‘increase in workload’ for directors is laughable.
Directors who get voted on to organisations should know what kind the commitment they need to make. If directors on a public company claimed that ‘increased in workload’ justified them a 20%-plus pay increase, there would be blood on the floor of the annual meeting.
