Fonterra defends golden handshake during hard times

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Fonterra defends golden handshake

3News NZ

Former Fonterra chief executive Andrew Ferrier (file)

Former Fonterra chief executive Andrew Ferrier (file)

By Tony Field

Fonterra is defending the golden handshake it paid to departing boss Andrew Ferrier. He pocketed $8.2 million when he left last year.

That figure was revealed today as Fonterra released figures showing its farmers are feeling the pain of a high dollar and falling prices.

Fonterra says Mr Ferrier left with a payout of more than $8 million because he met his targets.

“I know it's a lot of money, it is a lot of money, but the absolute core of any payment, fundamental payment, to our management is based on performance,” says chairman Sir Henry van der Heyden.

Federated Farmers believes the bonus is justified for a company with revenue of almost $20 billion.

“Look, I think the problem New Zealand has got is that we haven't got 50 people who are getting $8.5 million bonuses, because that will mean we have 50 companies the size of Fonterra,” says Federated Farmers chief executive Conor English.

There is no bonus for Fonterra’s farmers - their payout is down 19 percent on a year ago thanks to lower milk prices and a higher dollar.

“Pain is being felt now and it's going to depend on what happens for the rest of the season,” says Van der Heyden.

Global milk prices have risen since the end of the financial year, but the dollar is going up too.

Fonterra's chief executive Theo Spierings says there's not much they can do about the currency, which he says is being driven higher by the weak US dollar.

“I don’t think we have an open line to Obama,” he says.

Fonterra says with its farmers suffering it is looking to cut operating expenses by $90 million. That includes reducing travel costs, using fewer consultants, and not filling all job vacancies.

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Comments

27/09/2012 1:50:52 p.m.

Denise wrote:

More bad news for Fonterra, or should I say the shareholder. Perhaps another nail in the coffin. Just another company so hell bent on the mighty dollar. So much controversy, so many cover ups, and ever so carefully orchestrated media releases. What is going to happen when the giant crumbles? Nothing to those with power no doubt, but devastation to the poor hard working dairy farmer that makes up this countries backbone. I reckon the 8million should have be shared amongst the guys and girls sending them there beautiful milk. Shame it isn't so beautiful when they have finished with it!! Come on Fonterra,remember who greases your wheels. Just glad we switched our entire herd to A2, we get premium prices and nothing but support from a Corporation with a fabulous heart.

27/09/2012 10:17:04 a.m.

Judynz wrote:

Its all about Rewards for the `boys society'. If you haven't joined their society, you'll get peanuts. When is NZ going to WAKE UP & take their country back from the Corporates who are running things.

27/09/2012 8:33:12 a.m.

Mike wrote:

Getting paid for performance is usual in business.

$8 mil sounds a lot, but its still only 1% of profit.

I've worked where I increased revenue (by 25x) and profit by a huge amount and was given a 10% of the profit as a bonus. It does give an incentive to make things work better and one gets better performance.

Lowering of costs by 90 million is not much of a cost saving - around 0.5% for Fonterra and any business should be looking to make savings and improvements in their business. If businesses dont improve, they dont succeed. Kodak a good example of not adapting in business.

Fonterra is still looking to grow revenue, even with a stronger dollar, and they are not looking for the government to devalue and introduce inflation either, as a government intervened lower dollar would not be good for Fonteera or its sharholders either.

Even now with our higher dollar, its still lower than our trading partners Aus/UK/US/EU/Japan/China (who uses US$ mostly).

Fonterra would like the US to fix their weakening dollar, but as said, they dont have a line to Obama.

27/09/2012 6:55:09 a.m.

James wrote:

“I know it's a lot of money, it is a lot of money, but the absolute core of any payment, fundamental payment, to our management is based on performance,” Mean while the people involved who did the real hands on work got stuff all pay increase in comparison for making their boss look good.

27/09/2012 6:26:57 a.m.

alison wrote:

Brother of bill english or not, this sort of payment in our economy is ludicrous for doing a job he was hired for in the first place. Even if the companys worth 20 bill why would you gift this sort of money? Has there been special dealings done with the govt or something? no one can justify this payout its just grossly wrong.

27/09/2012 2:42:30 a.m.

Steve wrote:

Looking to cut operating expenses - i.e staff. Here is an idea - maybe do not pay your execs multi-millions of dollars! You could hire about 80 good quality staff for what they pay the people at the top. Do the execs really do the work of 80 people...? It has not always been like this in terms of exec salaries and companies still made profits (if not more!) than now.

26/09/2012 11:02:14 p.m.

Chris wrote:

Sick, sick, sick! This guy was 'earning' over $5m a year, and they want to give him an $8m bonus "because he met his targets"??? I earn $50k a year, and if I meet my targets, I (hopefully) get to keep my job! Damn these corporate parasites, they are screwing this country! There is simply no justification for paying someone that kind of money in a low wage economy like NZ (especially when they're running a monopoly like Fonterra, which has virtually NO competition).

26/09/2012 8:16:46 p.m.

Getoutanvote wrote:

Maybe all the members of Federated Farmers ARE earning too much money if they think this is reasonable, especially Connor English, who of course happens to be the brother of the Minister of Finance (seems a bit Casey to me). Clearly both brothers are completely out of touch with the reality.