Joe Bennett: I could have saved Fonterra half a billion dollars – eDairyNews
Countries New Zealand |29 marzo, 2018

Business | Joe Bennett: I could have saved Fonterra half a billion dollars

OPINION: I’ve heard this story told of both Sir Arthur Conan Doyle and Mark Twain, so the likelihood is that it never happened. But that doesn’t make it untrue.

Either Doyle or Twain is said to have sent the same telegram to each of a dozen friends. ‘All is discovered,’ said the telegram. ‘Flee at once.’

And of course, when he followed up to see how the joke had gone down, he found the friends had all fled. The story neatly illustrates the ubiquity of guilt, but it would also be a fine prank to play on chief executives.

Do you ever wonder about chief executives? Yes, so do I, and what I wonder is whether they wake up sweating in the middle of the night, seized by the dread that they’ve been found out. For, as all but the saints among us know, the middle of the night can be cruel, with truth and fear creeping from the pillow and having an ear each to whisper into.

I have a mental image of a chief executive curled like a foetus in his gold lamé pyjamas, hugging his withered flesh and whimpering for mother, which, as I’m sure you’ll agree, is a pleasing picture for those of us who’ve never climbed the corporate rungs and who have thus retained our souls as freightless as our bank accounts. For we live in the age of the cult of the CEO.

All cults are the same, be they political, religious or commercial.

They exalt an ordinary someone to the status of near-divinity. That ordinary someone becomes a demi-god, to be feared, revered, and in the case of the CEO absurdly overpaid.

Theo Spierings is the CEO of Fonterra. I have never met him and I am sure he is kind to children and puppies. I am interested in him only to the degree that he demonstrates the folly of CEO-worship.

Mr Spierings has just resigned after eight years in the job. In the last of those years he was paid $8.3 million. That’s $22,000 a day every day of the year, Christmas Day included. It would take a secondary school teacher three lifetimes to earn what Mr Spierings earned in 12 months.

It is conventional to call such a salary obscene. But I wouldn’t call it obscene if I was earning it. Indeed, if Fonterra had offered the CEOship to me rather than to Mr Spierings, I would have accepted. I would have then turned up for work for three months and done nothing whatsoever but twiddle my thumbs and oversee the stocking of the board room cellar before resigning with enough cash to let me go fishing every day for the rest of my life. And by doing so I would have done Fonterra a favour.

For on the day that Mr Spierings announced his resignation, Fonterra announced a half-yearly loss of some $400 million. The loss was caused not by a slump in demand for milk, nor by the farmers who get up at 4 in the morning to collect that milk, nor yet by the tanker
drivers or the cheese makers or the cows themselves. It was caused by an investment in China. Under Mr Spierings’ CEOship Fonterra bought 18 per cent of a Chinese infant formula company for three-quarters of a billion dollars. That investment is now worth a quarter of a billion
dollars. In other words half a billion bucks have melted away.

Mr Spierings has not accepted blame. Rather he has complained, delightfully, that the Chinese market changed in a way that no one could have foreseen. He implies that such ill fortune could have happened to anyone. Indeed so. But then what is the point of paying the CEO so much?

The only reason for his monstrous salary is that he understands the world of business better than anyone else and can see which way the commercial geese are flying. There is nothing else for a CEO to do.

Beneath him there is an army of competent managers overseeing the business. It’s the CEO’s job to have vision, to take the long view, to set the agenda, to think big. Mr Spierings thought big and got it wrong. So wrong indeed that if the board of Fonterra had appointed me
rather than Mr Spierings, this country’s largest company would now be half a billion smackers better off.

As I say, this is nothing about Mr Spierings personally. It is about the myth of the all-seeing all-knowing CEO whose quasi-divine talent for business is priced beyond rubies.

Mr Spierings, without apparent irony, has said that in the future he will be looking at a better world rather than a bigger job. Well, he can afford to. But a truly better world would be one no longer in thrall to the cult of the chief executive.

By: Joe Bennett

Source: The Dominion Post


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