Damien O'Connor says Fonterra managers should take a pay cut

Agriculture Minister Damien O'Connor has sent a blunt message to Fonterra's managers to take a pay cut, saying they haven't been performing.

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The Agriculture Minister says the managers of the loss-making dairy cooperative haven't been performing. Source: Q+A

Fonterra last week forecast a loss of between $590 million and $675 million for the year to July due to "significant adverse" one-off adjustments and said it will withhold a final payout to shareholders for a second year.

Mr O'Connor has said in an interview for tonight's Q+A programme on TVNZ 1 Fonterra management salaries are well deserved if the company performs.

"The fact is that they haven't been performing. You know, they should all take a cut at the moment, and until the company's back on a firmer footing," he said. 

"They've a new strategy that they're going to roll out and hopefully that will ensure more benefit for the farmers, for New Zealanders and for management," the minister said. 

Mr O'Connor said he's not sure if they will take a cut.

"That's up to, you know, the chief executive and the board to work through. The important thing is that the strategy they're developing is the right one for Fonterra, for the dairy industry and for New Zealand, he said.

The minister slammed the $4.6 million final payout to former Fonterra chief executive Theo Spierings who left the company last year, saying he didn't deserve it and it was a "ridiculous payment".

"That's something that the old board will have to answer to but maybe the new board shouldn't have in any contract for the CEO into the future," Mr O'Connor said.  

Asked by interviewer Jack Tame what he thought of Theo Spierings, the minister said: "Ah look, it's good that he's gone. We can get on and improve Fonterra, I mean get some better returns to farmers."

Mr O'Connor said the Fonterra experiment hasn't failed but "some of the governance and some of the management has, and clearly some crazy decisions made over the years that have now come home to roost".

He said he thinks the new board and new management at Fonterra are being upfront and being honest.

"They're writing down appropriately the level of value that they have. And farmers should now look to their cooperative saying, 'they're being upfront with us, they're being honest, now let's see where the plan is for a better future'."

* Q+A is on TVNZ1 on Mondays at 9.30pm, and the episode is then available on TVNZ OnDemand and as a podcast in all the usual places.