Fonterra chairman Sir Henry van der Heyden plans to step down from the role next year after a decade in the job.
In an announcement at Fonterra’s AGM today (17 November), van der Heyden said he would quit at next year’s annual meeting.
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Van der Heyden said Fonterra had started two years ago to look to appoint a new CEO and identify the dairy co-operative’s next chairman.
“I stood for another term because it was important we had stability through the transition to a new CEO,” he said. “That has gone very smoothly and a year from now our new CEO, Theo Spierings, will be into his second year. Then it will be time for a new chairman.”
At the AGM, Fonterra provided an update on its plans to allow its farmer-members to trade shares among themselves. The dairy giant announced the plan last year in order to improve the co-operative’s financial flexibility.
The Trading Among Farmers scheme would involve the creation of a market for share trading. At the same time, farmers would be able to free up share capital by placing some of their shares with a new shareholders fund, which would pay farmers for shares that they place with the fund, including the rights to dividends and the gain/loss from any change in the market value of those shares.
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By GlobalDataThe design contemplates the fund raising the money that would be paid to farmers for shares they place with the fund by issuing units to outside investors. This Fonterra has said, would give investors an investment linked to its financial performance while ensuring the company remains 100% farmer controlled.
The move was approved by Fonterra’s members but there has since been unease about how the scheme would be implemented. Fonterra has said a “custodian”, a company subsidiary, would have legal title of the shares but concerns remain among some farmers who fear their control over the company would be diluted.
Spierings said the proposed custodian would not threaten the farmers’ ownership of Fonterra but indicated the company could alter its plans.
“It’s proposed that legal title of those shares will be held by a custodian. I’m confident that the custodian – a 100% Fonterra-owned subsidiary – means ownership remains firmly with farmers because they own Fonterra. But in the end, my own point of view is not what’s important. The co-op’s shareholders need to have confidence too. We all need to be on the same page,” he said.
“That is why I have asked management to look to see if there is a workable solution where we can get legal title for shareholders if they place shares in the fund. We are going to push the boundaries to see if we can get to a workable solution that addresses shareholders’ concerns. It might be more cumbersome and expensive than having the Fonterra custodian, but we owe it to our shareholders to let them know before Christmas if there is another option.”
Spierings, however, said Fonterra needs permanent capital to improve its performance. “If I am going to get you the best returns, I need permanent capital – and that means I need Trading Among Farmers,” he told farmers at the AGM.
