Fonterra to save money on appointment of interim CEO Miles Hurrell

Wednesday, 15 August 2018

In just a few weeks Fonterra has a new chief executive and chairman.

Fonterra's new interim chief executive Miles Hurrell will not initially earn the eye-watering salary of his predecessor Theo Spierings.

Last year the Dutch boss was paid $8.3 million, made up of a $2.46m base salary, superannuation benefits of $170,036, and performance payments for 2016 and 2017 of $1.83m and $3.85m .

Chairman John Monaghan said while the dairy giant had to remunerate commensurate with the market it was in, 'it's fair to say Miles' starting salary is substantially less than where we've been'.

Fonterra has announced that Hurrell will take over as interim chief executive with immediate effect - a move described by Federated Farmers vice-president Andrew Hoggard as 'rather strange' timing.

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Fonterra interim chief executive Miles Hurrell.

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Monaghan said it was 'not best practice' to have the chairman and chief executive stand down at the same time, but events had overtaken that decision.

'We have to deal with the balls as they are bowled, but I'm quite energised, we have an opportunity to breathe some fresh air into the organisation and do things slightly differently.'

He said Fonterra would stop the global chief executive search while it reviewed the co-operative's current portfolio and direction and would not put a time frame on when it would be restarted.

'It's important that we give ourselves the time to take stock of where we are as a co-operative, breathe some fresh air into the business, then determine any changes that are needed,' Monaghan said.

New chairman John Monaghan says it is not 'best practice' to have the chairman and chief executive stand down at the same time.

'Appointing a new CEO is the most critical decision a Board will make. We will take all the time we need to find the right person.'

The 44-year-old Hurrell is the dairy giant's chief operating officer, Farm Source – the unit responsible for working directly with the co-operative's farmer-owners.

He described his management style as 'inclusive, I'm prepared to listen, take stock of situations and act accordingly. I should be judged on the performance over time. I've been 18 years in the business in some tough environments.'

Outgoing head Theo Spierings who will stay on until September 1, but after that his future with Fonterra is uncertain.

Monaghan said the board and Spierings had agreed it was the right time for him to step down. Spierings would work alongside Hurrell to ensure a smooth transition of leadership through to September 1.

Hoggard said the timing of the announcement was 'rather strange' because Fonterra must be close to choosing a permanent head.

The search for someone to replace Spierings started last November.

'I'd need a far more in-depth understanding of his [Hurrell's] skills. All I know is he's very approachable, I've never heard him say anything stupid. He's a safe pair of hands,' Hoggard said.

'But I've not read any reason for why Theo is stepping down now. It's just a week after a trading halt, not long after the chairman's gone, it's the sorts of things which make markets and investors jittery.'

Fonterra is New Zealand's largest company, with a $17 billion turnover.

In June Hoggard said after 14 years of overseas chief executives a Kiwi candidate who was involved with Fonterra would receive a positive tick.

'Hurrell would tick the box in terms of connecting with farmers, but I don't know about his other abilities.'

Fonterra's Shareholders' Council chairman Duncan Coull said it was pleasing to see the board was bringing stability to the co-operative from a leadership perspective.

'It's the right thing to do considering what's happened in the last few weeks. I have full confidence in the interim Miles will do what's required.'

Hurrell first joined Fonterra in the 2000. His 18 years' experience in the dairy industry has spanned four continents, including roles in Europe, the United States, Middle East, Africa and Russia.

Monaghan described him as a man of 'great mana'.

'He has a deep understanding of our business and has demonstrated his ability to manage large, complex business units in most of our global markets. Our CEO role requires intellect, energy and commitment. Miles brings that in spades.'

Hurrell said he was excited by the challenge.

'I've been part of the co-operative for 18 years and understand that its true potential really comes down to its people.'

He admitted Fonterra had not always got everything right.

In his most recent role, Hurrell has been responsible for Fonterra's global co-operative farming strategy that includes farmer services and engagement, milk sourcing and the chain of 70 Farm Source rural retail stores throughout New Zealand.