Fonterra chief executive Theo Spierings earned a total of $8.32 million in 2017, a 57 per cent jump from last year.
His earnings are 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, the co-operative’s latest annual reports shows.
Spierings is not the only big earner in New Zealand’s largest company, with 23 other executives receiving up to $1m for their efforts. Of those, five left the company during the year.
Spierings’ total package appears to put him in the number one slot among New Zealand CEOs.
Former Sky City CEO Nigel Morrison received $6.4m in 2016, but that was made up of a base salary plus dividends and leave entitlements, while Fletcher Building CEO Mark Adamson was given $4.7m.
A Fonterra spokesman said Spierings took a voluntary pay freeze on his salary in 2015, and that had remained the same.
However, this year he was being rewarded for big gains in the added value part of Fonterra’s business.
In 2015, there was an outcry until Spierings finally requested the freeze for the 2015-16 year, amid losses of more than 700 staff.
Federated Farmers vice-president Andrew Hoggard, himself a Fonterra supplier, said it would be useful to know what Spierings’ counterparts in leading international dairy companies earned.
“Is Fonterra spending as a percentage of revenue more than other companies on its senior management, is it spending less on its scientists?”
“To me that’s the intelligent discussion we ought to be having – that’s a story I’d like to talk about,” Hoggard said.
He asked what the performance measures were based on.
“If it’s on the fact the milk price has gone up, that’s the wrong measure, because he’s got zero control over that, but if it’s based on moving milk into higher value products, increased profitability, reduced costs, then he’s obviously earned it,” Hoggard said.
Fonterra on Monday released its latest annual report, posting an after-tax profit of $745 million, down 11 per cent on last year.
In its annual report, Fonterra said it used two independent advisors who looked at 24 listed Australian companies of similar size and complexity to provide a benchmark.
Management were remunerated through a “velocity leadership incentive” introduced last year, and set targets they had to reach before bonus payments came into play.
Chairman John Wilson said in 2016 and 2017 velocity delivered initiatives of over $2 billion in value. From this year, Fonterra was returning to a more traditional incentive programme, linked to return on capital, earnings per share metrics, and aligned to farmer returns.