Wednesday, July 6, 2022

Farmer-director remits proposers unhappy

The proposers of a remit to the Fonterra annual meeting about farmer-directors are none too happy with the Shareholders’ Council recommendation against it.

Farmer-director remits proposers unhappy

The remit seeks to change the wording of clause 12.2 to “a minimum of” nine farmer directors on the board, not maximum as present.

The council said farmer-shareholders should not vote in favour because the remit was pre-emptive of a governance and representation review and could cause practical difficulties in the future.

Lachlan McKenzie and Ann Jones said the Shareholders’ Council had made a hasty decision in not supporting a well thought-out shareholder resolution.

They said farmers were capable of making up their own minds about the merits of the proposal.

However, the Shareholders’ Council recommendation must also raise the likelihood that Fonterra’s board won’t support the remit in explanatory notes on the December 17 order paper.

That would normally prevent the remit from obtaining the necessary 75% approval to achieve a constitutional change.

Shareholder remits to the annual meeting like this one are not binding on the board unless proposed as special remits to amend the constitution.

Shareholders’ Council chairman Ian Brown tried to reassure farmers that the more formal review by a working group chaired by Malcolm Bailey and Dirk Sieling would bring forward recommendations next year that could not be enacted without 75% shareholder approval.

But then curiously Brown reserved the position of the council on the McKenzie/Jones remit until after the outcome of the shareholder vote, despite having recommended that shareholders vote against it.

He explained that the council didn’t want to make a formal consideration of the remit and potentially kill it off now under clause 18.1 of the constitution, before both the vote and the review outcome.

Clause 18.1 says the council must be at least 50% in favour of any constitutional change.

Brown said both the 75% shareholder approval and the 50% council approval illustrated the checks and balances written into Fonterra’s constitution.

“The review process is under way, so we won’t want to do anything to pre-empt that, and nor do we think the McKenzie remit is needed at this time,” Brown said.

However, McKenzie took issue with Brown’s claim of a “careful review” of his remit, saying no contact had been made with him or the group’s lawyer for further explanation or dialogue.

“If Brown truly believes in his comment that he ‘respected the rights of shareholders to propose resolutions for deliberation by shareholders’ he would have entered into genuine consultation, supporting a resolution that enshrines farmer control into the constitution.”

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