Theo Spierings deserved pay packet, despite loss - Fed Farmers


Theo Spierings did a lot of good for Fonterra that will be overshadowed by the failed investment in China, according to Federated Farmers.

Mr Spierings on Wednesday announced he would be stepping down as CEO, after the co-op reported a $348 million loss in the six months to January.

The hit to Fonterra's bottom line included a write-down of the value of its shares in Beingmate, a Chinese manufacturer of milk powder, and a one-off payment to Danone following the botulism scare.

Fed Farmers vice president Andrew Hoggard told The AM Show the failure of Fonterra's business in China was "disappointing".

"It's been a concern for farmers for a number of years. Next year we've got the director meetings around the country. Farmers will be asking tough questions around what's happening there, what's the way forward - can we build it back up? Can we rescue the value? Is it a write-off?"

Andrew Hoggard.
Andrew Hoggard. Photo credit: The AM Show

Ignoring those one-off losses, Fonterra posted an after-tax profit of $248 million and raised its forecast farmgate milk price from $6.40/kg to $6.55. Mr Hoggard said it's the result of a few consecutive good seasons.

"It's a good place to be, and everyone should be making some profit, being able to pay down debt, invest back in the farm and keep things ticking along quite nicely."

Mr Spierings said his resignation after seven years at the top wasn't related to the co-op's big loss, calling it a "normal succession and evolution of the company".

Mr Hoggard defended Mr Spierings' hefty pay packet, which including bonuses could reach as high $8 million.

"I haven't found too many farmers that have been upset about it, really. It's more so the rest of New Zealand," he told The AM Show.

"Most farmers, we recognise the fact we're a major global company, we've got to compete against the world, we need to pay a world-class salary to get world-class performance."

Theo Spierings.
Theo Spierings. Photo credit: Reuters

But did Mr Spierings deliver a "world-class performance"? Mr Hoggard thinks so, saying Fonterra's done a lot better in recent years than its Australian equivalent Murray Goulburn - which for a while was paying farmers less than what it cost them to make the milk.

Mr Hoggard also credited Mr Spierings with Fonterra's Milk for Schools programme, which will soon celebrate its fifth anniversary, and developing the co-op's social responsibility rules.

"Unfortunately for him he's going to be remembered for China."

He expected Mr Spierings would get his base salary of around $2.463m, which can't be touched, but that his bonuses would be "definitely down or non-existent".