The Board of Fonterra
Fonterra is New Zealand's largest company as well as being a significant player in the global dairy industry.
The Board and Management are committed to a system of corporate governance that meets the unique requirements of our shareholders and best practice appropriate to a co-operative. As New Zealand's biggest company, our governance approach takes into account recommendations by the New Zealand Securities Commission and NZX.
Composition
The composition of the Board is a significant element in the governance of the co-operative. The Board is comprised of up to 13 directors. Under the Fonterra Constitution, nine of the directors are elected from the shareholder base (Elected Directors), and four are appointed by the Board and approved by shareholders at the annual meeting (Appointed Directors). There are no executive directors.
Appointed directors have a significant role to play in providing a balance of independence, skills and experience to the Board, complementing the deep understanding of the dairy industry provided by the elected directors. Consequently, appointments are only made after a process involving an extensive search based on detailed critera. Appointed directors are appointed for a term specified by the Board, subject to shareholder approval. Elected directors are appointed for a three-year period through a postal ballot.
Independent directors
The Fonterra Constitution specifies the composition of the Board and does not distinguish between "independent" and "non-independent" directors. The appointed directors are independent and free of any supplier relationship with the company. However, the co-operative nature of the company means that elected directors, who must be shareholders, will have a supplier relationship with us. While none of the elected directors are material shareholders, they are not classified as independent under the NZX definitions because their supplier relationship with Fonterra is material to their business activity.
The Board considers that the mix of elected and appointed directors, as mandated in the constitution, provides an appropriate balance so that the Board operates in the best interests of the co-operative’s shareholders.
All directors comply with the legislative requirements for disclosing interests, and Fonterra has a Securities Code of Conduct, which guides and regulates both directors and management in their personal dealings with Fonterra securities and those of related companies.
