Miles Hurrell has been permanently appointed as Fonterra Cooperative Group’s chief executive, with immediate effect, earning a pay packet of $1.95 million plus incentives.
Hurrell was appointed interim chief executive in August last year when Fonterra announced Theo Spierings was leaving the role early after the world’s biggest dairy exporter lowered its farmgate payout and trimmed its dividend to retain cash.
In September, the dairy giant posted its first ever full-year loss after writing down the value of its Beingmate Baby & Child Food investment and paying a settlement to Danone. It announced a “full stocktake and portfolio review,” looking at all its major investments, assets and joint ventures to see how they are performing and where they fit within its strategy.
Fonterra’s review includes the divestment of assets no longer deemed core to the wider business, such as the current sale of Tip Top. The Australian newspaper yesterday reported Australian packaging billionaire Raphael Geminder and Kiwi billionaire Graeme Hart are in the mix as potential buyers of the ice cream business, which may fetch about $400 million. Other parts of its business under review include its under-performing Chinese farms.
“Miles has been performing well under difficult circumstances. Our performance is not something that will be fixed overnight. It will require the courage to make difficult decisions, be up-front with farmer-owners, unit holders and other stakeholders, and instil a culture of accountability and performance right across the organisation,” said Fonterra chairman John Monaghan.
The announcement came on the heels of Fitch Ratings putting Fonterra on notice over its credit rating, saying its asset sale programme will be critical in getting debt under control.
Hurrell said his six months as interim chief executive reinforced his view that “despite the challenges with our current performance, the fundamentals of this business are strong. To realise our potential we need to get the basics right and that means a full review of our strategy and ultimately, a fundamental change in direction.”
Fonterra said Hurrell will be paid a base salary of $1.95 million, with additional short and long-term incentive payments based on the achievement of targets agreed with the board.
His predecessor, Spierings, was paid a base salary of $2.46 million, and pocketed $8.07 million on his way out the door, of which $4.19 million came from deferred long-term incentives. Spierings didn’t meet his long-term targets in the 2018 financial year, with the board linking the senior management team’s bonuses to return on capital and earnings-per-share growth through the 2018-2020 period.
Units in the Fonterra Shareholders’ Fund lifted 0.7 percent to $4.28.