Fonterra’s next CEO should be a Kiwi, say shareholders

Dutchman Theo Spierings steps down as chief executive at New Zealand’s biggest company later this year after nearly seven years in the job. His predecessor was Canadian Andrew Ferrier.

The big farmer-owned co-operative said it had started a global search for Spierings’ replacement, who will be in place by the end of this year.

Former Fonterra deputy chairman Greg Gent said a Kiwi appointment would ensure a connection with farmer-shareholders, with the Government and with New Zealand.

“That whole connection (aspect) is really important in a co-op. And the business operates under legislation so it’s not a free entity in its own right and you can’t ignore that side of it either.

“It’s harder I think to go to Wellington and talk for New Zealand Inc if you have a foreign passport.”

Gent, a Northland shareholder, said an appointment from within Fonterra would send “a great signal” to the co-op’s staff.

“If their internal succession policies are working properly, they surely to hell can bring someone through. Kelvin Wickham is the guy to go for.”

Wickham is chief operating officer of NZMP. He leads the sales and marketing of all Fonterra ingredients globally and is a long-time senior executive.

Andrew Watters, chief executive of farm investment syndication company MyFarm Investments and a Fonterra shareholder, said there’s talk in rural circles that it’s time a Kiwi headed Fonterra.

“I’ve heard a few people say it’d be good have a Kiwi – someone with a Kiwi accent who can empathise with farmers and shareholders. That would be nice but I wouldn’t want it at the expense of quality and capability,” he said.

Outspoken Tirau farmer-shareholder and accountant Lindsay Blake wanted the best quality chief executive appointed, but said a Kiwi appointment was particularly timely.

“If ever there was a time an accent is important it’s now because they have to understand how important the co-op is to New Zealand,” Blake said.

“I think we’ve done a huge disservice to New Zealand and Fonterra’s staff in our opening statement to the world that we’re going to the global market. In effect, you’re saying indirectly that there’s no one here good enough in New Zealand and no-one good enough internally.

“We’ve had a couple of outside CEOs and frankly we haven’t had great performance. It hasn’t stacked up that the global marketplace provides us with good executors and sound judgment. In my view we’re not looking for an empire-builder, We had that and it failed,” she said.

“It’s time to give Kiwis a go,” said another shareholder who declined to be named.

“All companies should be looking to develop people internally anyway.”

Fonterra Shareholder Council chairman Duncan Coull said he had no preconceived ideas about the nationality of the next chief executive.

“First and foremost is leadership (ability) and then ability to deliver in the global market place we operate in,” Coull said. The council is elected by farmer-shareholders to represent their interests in dealings with the company.

Shareholders contacted by the Herald also believed the new chief executive should review Fonterra’s current business growth strategy.

Gent said the strategy had failed “to a large extent”.

“It’s been around FMCG (fast-moving consumer goods) with a lot based out of China. What have we burned, $1.5 billion, out of China now? Absolutely it’s due for review.”

Watters said there were “some good parts” to the current strategy. “But it’s frustrating that 50 per cent of what the company does hasn’t been done well and we can’t have these big headline failures.

“We have to do the basics well and implement the strategy well but I’m not sure how good an investor we are.”

Fonterra’s balance sheet was stretched and with no significant milk growth in New Zealand likely in future, the company had to “cut its cloth” to suit its financial situation, said another shareholder.

“We’ve had massive milk growth over the past 15 years and all that capital has been poured into the company. That’s not going to happen again.

“If there are good propositions to be had overseas we should do them, but the available capital for investments is going to be significantly less than in the past,” he said.

Coull said Fonterra’s chief executive was the “team leader” for the organization, so the new appointee must have a proven track record of strong leadership and being able to galvanise, motivate and inspire staff to deliver for the business and shareholders.

By: Andrea Fox

Source: NZ Herald

Link: http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12032015

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