For Immediate Release
Sunday 16th September 2018
FONTERRA, HOME OF THE POOR-PERFORMANCE BONUS
The directors of Fonterra have set a dangerous precedent in rewarding the departing chief executive a $3.85m performance bonus for the 2017 financial year when the co-operative profits plunged, said Peter Malcolm, spokesperson for the income equality project Closing the Gap.
While directors often claim that high salaries and bonuses are needed to reward chief executives for good performance, Fonterra’s dismal results, laid bare in its latest Annual Report, expose these bonuses are a sham, Mr. Malcolm said.
“These excesses show not just gross inequality in remuneration between executives and workers, but inequality in how they’re treated: staff working in Fonterra’s factories or driving their milk tankers don’t get bonus pay for doing their jobs, but poor performance is punished,” he said.
Directors must learn to treat their chief executives in the same way frontline workers are treated. Instead, Fonterra’s annual report shows the outgoing CEO was paid $8.3 million, including a “long term incentive” of $3.85 million, at the same time as the dairy cooperative reported its first ever net loss.
“For a CEO to earn a bonus after a dismal financial performance demonstrates incompetence among the directors who approve the bonus structure. At Fonterra, this is just another exorbitantly high salary masquerading as a bonus,” Mr. Malcolm said.
Chairman John Monaghan says in the report that “it’s time for a refresh in a number of areas”.
“We suggest the board take a hard look at better aligning the pay and treatment of those at the top with the thousands of workers at the milk face,” Mr. Malcolm said.
Fonterra Annual Report: https://www.fonterra.com/nz/en/investors/financial-results.html