Fonterra unveils divestment plan
Fonterra is exploring full or partial divestment options for its global Consumer business, as well as its integrated businesses Fonterra Oceania and Fonterra Sri Lanka.
The co-op's board and management have again been caught out of step with the owners of the business; it seems the TAF debacle five years ago has been forgotten.
Last week nearly 54% of Fonterra shareholders voted to reduce a bloated board from the current 13 to nine. Voter turnout was higher than in previous polls: 65% of farmer shareholders representing 73% of the co-op's total milksolids had their say.
While the proponents of change – former directors Greg Gent and Colin Armer – fell short of the 75% support needed to force amendments to the constitution, the result is sending shockwaves through Fonterra.
A majority of farmers defied a directive from the board and the Shareholders Council that they vote against the Gent/Armer resolution – a slap in the face for Wilson, the board and the council.
It poses bigger questions for the council, which represents grassroots Fonterra farmers; did they blindly follow the board in urging farmers to vote against the resolution?
And how can they now claim to represent the views of all shareholders when 54% disagree with them on the crucial issue of governance and representation?
For some Fonterra farmers the council has been guilty in the past of acting as a mere puppet of the board. Last week's vote shows farmers no longer condone such behaviour.
The board and council are promising to embark on a consultation process; their problem is the groundwork has been done. To their credit Gent and Armer mounted a clever campaign, taking only a few weeks to announce their resolution and visit farmers around the country to garner majority support.
A majority of farmers have made up their minds; they believe Fonterra's future lies in a smaller, leaner and fitter board.
The board and council have two choices: either convince shareholders that Gent and Armer are wrong or recommend a nine-member board as agreed by a majority of farmers.
A smaller board will mean new director elections, possibly in the second half of next year.
With the Gent and Armer camp already commanding 54% support they are strongly positioned to grab control of the board, surely signalling the end of Wilson and his faction's reign. And the new board will be keen for a clean start; chief executive Theo Spierings' tenure may also be under threat.
Fonterra is at crossroads and the next few months will decide where the co-op will head; what's certain is that a majority of farmers have made up their minds.
2016 is shaping up as a year of change for Fonterra.
