Proxy votes vital for fair Fonterra reshape
BY RICHARD WOODD
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Problems getting trustee signatures is not sufficient reason for dairy farmers not to exercise their proxy voting rights this week in the most significant business restructuring plan in New Zealand's history, says Fonterra Shareholders' Council chairman Blue Read.
He was responding to concerns by Eltham farming trustee Deborah Clough, that the "hassles" she found in getting her lawyer, accountant and family members to sign the proxy forms as trustees, could discourage many farmers from voting.
Her solicitor (who asked not to be named) is a member of 100 dairy farming trusts and he says her request for a proxy voting signature last week was the first he had received for capital restructuring resolutions to be considered by the company's annual meeting in Ashburton on Wednesday.
The papers were received by shareholders only two weeks ago but he had signed more since and had more booked in. Fonterra's constitution required all trustees to sign proxies, but most solicitors and accountants had power of attorney arrangements to cover any inconvenience.
"Every farming trust is different and the trustees need to take their responsibilities seriously, especially when it comes to an important vote such as this," he said.
Mrs Clough says she had to do "a lot of running round at a very busy time of year to get these signatures". She also thinks the consultation has been too short and there should be an online voting option.
But a Fonterra spokesman says the Companies Act does not allow online voting and the process is being conducted as the company constitution requires.
Mr Read agreed the timeframe has been tight, but said it was disappointing to hear this criticism after an unprecedented level of consultation, very well publicised.
"This vote is probably the biggest thing ever to happen in New Zealand in business history, let alone farming, and everyone's talking about it," he said.
"It's being done according to the constitution. It's not good enough to suggest getting proxy signatures is a roadblock. People in the farming business with trusts should be well aware of their obligations and the need to get themselves organised to vote, and their solicitors and accountants are part of that.
"Fonterra doesn't make these rules and trusts are responsible for their own structural and legal requirements."
Mrs Clough is concerned that if farmers do not vote by mailed proxy, some Fonterra directors could have an unfair advantage with their large voting entitlements.
The total eligible vote is 1.3 billion (one for every kilogram of milksolids supplied to Fonterra last year). The key resolutions must be carried by 75 per cent of the votes received.
The Fonterra directors collectively have 16,883,004, which is less than a quarter of 1 per cent of total votes. The biggest along with them is Colin Armer of Te Puke, who has 15.8 million, mostly through his investment in Dairy Holdings.
He says he has "not asked people to assign their proxies to me, I'm just encouraging all farmers to vote. This is how it's required by the constitution and it's very difficult to change."
Agriculture Minister David Carter and Fonterra chairman Sir Henry van der Heyden are also urging farmers to exercise their votes.
"This vote is all about strengthening the co-operative," Sir Henry said. "It is as important as the vote that farmers made to form Fonterra and it is important that farmers have their say."
Some farmers had asked if the capital structure could be resolved just by having aggressive retentions from payout.
"Neither retentions nor the proposed dry shares will solve the problem on their own. It needs a mixture of both, and the possible Step Three (trading among farmers) to fix redemption risk completely. Having an aggressive retention policy on its own wouldn't work for all farmers, particularly those that have just joined the industry, and aren't in a position to sacrifice payout for retention."
Fonterra's capital structure proposal represented almost a year's work. "We have looked for a solution from every possible angle, we've stress tested it with the shareholders' council and they have given it their full support. Farmers have made it clear that they want to retain 100 per cent control and ownership of the co-operative and these steps ensure that.
"We sought feedback from farmers through meetings with directors throughout the country and hundreds of local shed meetings. The focus at these meetings has been on Steps One and Two. Trading among farmers will be a totally separate consultation with farmers next year," Sir Henry said.
- © Fairfax NZ News
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