Two Fonterra suppliers and former board members are calling on Fonterra shareholders to reduce the number of directors in an effort to improve the company's performance.
John Wilson (centre). Photo: RNZ / Diego Opatowski
Greg Gent and Colin Armer have put forward a notice of proposal to the company's annual meeting in late November seeking shareholder support for a reduction of board members from 13 to nine.
Mr Gent said the motion was to reduce the number of elected directors from nine to six and the number of appointed directors from four to three.
He said boards of Fonterra's current size did not work.
"It is way too large, it makes decision-making slow and it can potentially lead to factions," he said.
"We want to see a fit, lean and high-performing Fonterra, and a key part of that is getting a fit, lean and high-performing board - and 13 certainly isn't that."
It was rare to see boards of that size, Mr Gent said.
"I don't want to dwell on the performance of Fonterra currently and I'd rather focus on improving its performance moving into the future. And farmer shareholders have a view on that and they will vote on that but it is around improving the organisation.
"I think any company regardless of performance can always do better and it starts at the top."
It was a huge ask to get the 75 percent support needed to effect the change but anything over 50 percent would send a strong message, Mr Gent said.
Fonterra Chairman John Wilson said in a statement saying bringing a special resolution to an annual meeting on such a critical matter as governance was not the way the co-operative operated.
The board and shareholders' council were working together to develop a discussion document to take to shareholders early next year, he said.
The company needed to have a constructive and genuine consultation within the shareholder base - not impose a solution developed by just two farmers.
Mr Gent and Mr Armer both knew governance and representation was top of the board and shareholders' council agendas before the botulism and 1080 incidents, Mr Wilson said. Those discussions were put on hold until those issues were under control and, more recently, focusing on the payout had to take centre stage.
But Mr Gent said the board gave an undertaking in 2012 to review governance but nothing happened so they don't have any faith that a promise to review governance will come to anything as a result and that's why they are introducing the motion.