Is all well at Fonterra?Monday, Jan 21, 2002
The short notice resignation of Fonterra’s appointed outside director Michael Smith should be shouting
a beware warning to Fonterra shareholders.
Little information is available on the cause of his resignation, but it seems unlikely to be for “personal”
reasons, leaving room for speculation that the cause is his board room concern about the strategies
or operations of Fonterra.
It has always been a given that melding Fonterra into an effective international dairy coop would be
challenging and that there would be disagreements and casualties along the way.
But that this first apparent major board room disagreement should cause a director, who seemingly has
the qualities and experience needed by the company, to be spun out so early in the establishment
phase demands a detailed explanation.
The chairman Mr Roadley owes shareholders an explanation of what is happening on Fonterra’s board and
more particularly if the cause of Mr Smith’s resignation arises from board decisions that have crossed
into the area of questionable business ethics that impinges on each director’s collective responsibility.
It is well understood that as dairy coops have grown larger the appointment of outside directors with
broader business experience has added much to the quality of board practises and decisions in the
farmer directed cooperatives.
It will be a waste if Mr Smith has been given an intolerant ‘bugger off’ because he has pressed a point
of view that was more conservative or more ethical than that sought by the farmer elected board
Mr Roadley and Mr Smith have a responsibility to be upfront with an honest explanation of what is going