Fonterra is receiving a $550 million cash boost following the sale of its 50% stake in pharmaceutical maker, DFE Pharma.
Ever since Fonterra’s inception and the creation of the supposed shareholder ‘watchdog’, the shareholders council has been seen as little more than a toothless body which just rubber-stamps the co-op’s decisions and acts as a glorified training ground for future directors. That impression has been furthered by the fact that the current chair – and his predecessor — were both former chairmen of the shareholders council.
A resolution for Fonterra’s upcoming annual general meeting, to be held at Invercargill on November 7, wants the independent review to be conducted “immediately post” the 2019 annual meeting.
Lumsden dairy farmer Tony Paterson, the mover of the resolution, wants the review to look at how the council can be “a more effective cornerstone shareholder”. It will also consider if the current model is working for farmers and is there a better model.
Patterson believes Fonterra’s performance is below par and that more effective monitoring by the shareholders council could have prevented the co-op’s slide into red.
However, after the motion of resolution was filed with Fonterra, the shareholders council suddenly announced an ‘internal review’. In an email to farmer shareholders on October 1, council chair Duncan Coull said the council’s review will look at its structure and functions under Fonterra’s constitution.
“We have heard the criticisms and frustrations and have been reflecting on them,” he wrote.
Sorry? The shareholders council’s answer is to conduct its own ‘internal review’ of its functions? You have to be kidding.
As Tony Paterson rightly says, a review “should be independent, not one conducted by the council”.
Fonterra shareholders must be given the opportunity to decide whether the council is fit for purpose and farmers should strongly back the resolution for an independent review.
As the oft-quoted saying goes: ‘The definition of insanity is doing the same thing over and over and expecting a different result’.
It is time Fonterra farmers put a stop the shareholder council’s latest burst of insanity.