Fonterra CEO asks for pay freeze

  • 01/10/2015
Theo Spierings (Photo: SImon Wong)
Theo Spierings (Photo: SImon Wong)

Fonterra's chief executive Theo Spierings has asked for a freeze on his salary, as the company struggles to remain competitive on the international stage.

The dairy giant has cut 750 jobs as part of a major review prompted by challenging conditions in the global dairy market, with Mr Spierings saying there was more "fine-tuning" to come.

The same day the company announced extra job cuts last month, Mr Spierings requested a freeze be placed on his $4 million base salary, Radio New Zealand reports.

The freeze does not apply to any bonuses Mr Spierings receives.

Earlier this month the company announced a dairy payout for the 2014/2015 season that was 45 percent down on last year's figure.

Despite the lower payout this year, Fonterra earned a $506 million profit, and announced Mr Spierings received an 18 percent salary increase for his work last year – bringing his pay package up to $4.9 million, including performance incentive payments – when farmers received a record-high payout.

The pay increase received criticism from farmers, but a spokesperson for Fonterra told Radio NZ the chief executive's salary was based on independent, international benchmarking and was approved by the company's people, culture and safety committee.

The company employs 18,000 staff globally, and 11,500 in New Zealand.

Federated Farmers' dairy head says Fonterra boss Theo Spierings should not be vilified for his multi-million dollar salary and it needs to be compared with overseas dairy bosses.

Federated Farmers dairy spokesman Andrew Hoggard says Mr Spierings' basic pay is linked to a number of metrics, "so due to the current downturn it might not have been going up that much anyway for this coming year".

"Obviously he recognises that at a time when the owners of Fonterra are suffering that any pay increases would not be a good look," Mr Hoggard told NZ Newswire.

"However I do get frustrated with all these stories on salaries etc at Fonterra... just discussing the one number being Theo's salary in isolation is a fairly uninformed conversation."

An informed conversation would compare Mr Spierings' salary to that of his counterparts at Arla, Friesland Campina, or Dairy Farmers of America.

"They are similar sized co-ops to Fonterra, and thus comparisons with them offer a more informed discussion, where we can compare the relative performance of those companies and that can then inform us as to whether salary increases are justified or not."

3 News / NZN