Spierings Case Shows Excessive CEO Pay Isn't Justified

  • Spierings Case Shows Excessive CEO Pay Isn't Justified

Spierings Case Shows Excessive CEO Pay Isn't Justified

The $8.3 million annual pay package for Mr. Spierings, who will leave Fonterra this year, highlights the ever-widening gap in New Zealand between CEO and worker pay - with CEOs earning 30 to 50 times more than the average wage, Mr. Malcolm said.

He said Mr Spierings had made an "extraordinary" contribution in his almost-seven year tenure in the job and Mr Spierings said he would look forward to focusing on a "better world but not a bigger job".

But in its interim results relases today, Fonterra said net normalised profit after tax had fallen 36 per cent from its 2017 result, to $248 million.

Chairman John Wilson says the ongoing strong global demand for dairy and stable global supply are continuing to support global prices, particularly for the important Whole Milk Powder category.

Wilson said the surprise announcement on Spiering's departure had been brought forward from April to quell increasing speculation, adding that formal succession discussions began last November and the board were at the stage of shortlisting candidates.

"It is not yet clear exactly when any appointment for Theo's replacement will be made, but it is absolutely clear that Theo will continue in the meantime to drive the co-operative's strategy and business, with special emphasis on China", he said.

"The Board and Theo are committed to a high-quality transition to a new CEO and when we have more information in regards to timing we will let our farmers and the wider market know".

Fonterra has reduced the carrying value of this investment to $244 million. If we are not a highly agile company, we are going to be disrupted.

Spierings explains, "While our reported net profit after tax (NPAT) shows a loss of $348 million, it includes the payment to Danone and the Beingmate impairment". That compares to $NZ6.16 a kilo for milk and a total return (including earnings) of $NZ6.52 a kilo.

Wilson said, "While we appreciate the substantial opportunity and privilege of our business in China, our shareholders and unitholders will be rightfully disappointed with this outcome".

The result also accounted for the $183 million settlement to French food company Danone after Fonterra's precautionary recall of whey protein in August 2013.

"Beingmate's continued under-performance is unacceptable", he said, with the Chinese company struggling amid fierce competition.