18 Dec 2012

Fonterra to lower limit on size of shareholders' fund

6:05 am on 18 December 2012

Fonterra's owners have voted to lower the limit on the size of its new shareholders' fund.

At the co-operative's annual on Monday, they supported a resolution to reduce the cap on the size of the fund from 25 to 20% of the total shareholding.

The fund, which was opposed by some farmers, allows outsiders as well as the company's own shareholders and staff to invest in the dividend earnings from shares farmers and the company deposit in the fund.

More than 89% of farmers who voted supported the move to lower the fund limit, well above the 75% vote required.

Farmer shareholders also approved other measures to limit the amount of shares they can place in the fund and reduce the shares they can hold above what they need to match their milk supply.

However, they rejected another resolution, put up by a shareholders' group, to reinforce the farmer majority and control on Fonterrra's board.

John Wilson to replace Sir Henry as chairman

Director John Wilson, who is to replace Sir Henry van der Heyden as chairman, has secured his seat for another term on the board of the co-operative.

Fonterra on Monday announced the results of its election. Eleven candidates were contesting three seats on the board.

Mr Wilson regained his seat, as did the other sitting director, Nicola Shadbolt, who's a farm owner and associate professor of farm and agribusiness management at Massey University.

A third vacancy, created by the resignation of Colin Armer will be filled by Blue Read, a Taranaki dairy farmer and former chair of the Fonterra Shareholders Council.

Their terms are for three years.

Mr Wilson will take over as chairman of Fonterra at the annual meeting in Hamilton on Monday.

Sir Henry will stay on as a board member for another six months.

He told the meeting that he had enjoyed every minute of his role and that it has been a privilege.

Sir Henry van der Heyden said he's left the company in a stronger position than when it started.

He said Fonterra's assets have grown 27% to $15 billion since its formation in 2001, which has benefited its 10,500 owners in terms of higher land values, shares and earnings.

Sir Henry was the driving force behind Trading Among Farmers, which the company insisted was needed to strengthen its balance sheet.

Meanwhile, chief executive Theo Spierings said Fonterra is focused on lifting volumes to consumers and the food service sector, reducing costs and investing in high-growth areas.