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Fonterra's $40 million Ferrier revealed

Fonterra has paid former chief executive Andrew Ferrier an $8.2 million golden handshake.

This was confirmed by outgoing chairman Sir Henry van der Heyden at today's annual report press conference in Auckland.

All up, Mr Ferrier would have grossed more than $40 million for his eight years with Fonterra.

Sir Henry told NBR ONLINE the $8.2 million payment is based on the company's performance, such as net profit, and had very little to do with the milk price.

"It's no different to any other organisation," he says.

The payout included a "wash-up" of short-term and long-term incentives.

"Over a number of years, they were all concertinaed and paid out when he left.

"It is a lot of money, and that's why I tried to front it. It'd be the first question I'd ask."

The dairy giant's annual report, released this morning, had revealed a single employee received a "cessation" payout of between $8.22 million and $8.23 million in the 2011-12 year.

Mr Ferrier, who left the company in September 2011, was paid an annual salary of about $5 million for his last two years.

Anika Forsman, who works for Fonterra's communications arm, Baldwin Boyle Group, had earlier said the co-operative's management could not be reached to confirm Mr Ferrier was the recipient.

The report's annual statement reveals almost 4000 Fonterra employees earned more than $100,000 – 3956 in 2011-12, compared to 3502 in 2010-11.

Employees paid more than $1 million is also up, from 20 (including one cessation payment) in 2010-11, to 26 (three cessation payments) in 2011-12. 

In July, it was announced Mr Ferrier will chair the board of New Zealand Trade and Enterprise.

The Canadian executive first came to New Zealand in 2002 from a career in the global sugar industry and led Fonterra through a formative decade before stepping down for newly appointed Dutch chief executive Theo Spierings.

Mr Ferrier became a New Zealand citizen in 2008. He will take up the three-year term at NZTE, starting in November, replacing incumbent Jon Mayson.

More by David Williams

Comments and questions

26 millionaires is a lot.

I wonder what the farmers think of that many city-slickers earning that much of their backs.

well I can tell you , we are disgusted.

City folk need to grow up, what Ferrier and Fonterra have done for this country is the main thing keeping us out of a recession. The amount of money that gets tipped back into the economy from dairy farming keeps your individual buisnesses from falling over. Most people these days are happy to pay $3 for a bottle of water but throw their toys out of the cot for milk costing the same price!

one assumes 33% of that goes back to the Government????

Unlikely....Most will have negatively geared investments, and be claiming all sorts against their paye.

Price of milk going up!

No, payment to farmers is on the way down........

Given the Town Clerk earns $840K and Gattung and Reynolds both trousered $30-mil each....I'd say a guy who built a serious business was cheap as chips at $40-mil.....given the first three mentioned were simply a massive minus.

Did he not receive a salary while employed at Fonterra?

no wonder the price of milk has gone milking the cows....smarter employee's milking the farmers....

Fonterra has 16,000 employees and almost 4,000 earn more than 100k. Wow sign me up...
How much does a tanker driver get?

How much does a tanker driver contribute???

Same thing for the taxpayer-built and now private telephone monopoly. Telecom has 7000 NZ employees and half are on $100K+. A license to print money, these companies are. Makes you wonder about the Kiwi people though. For three decades they've been voting for all this by electing a string of deceitful, conniving governments who have returned the favour by treating them with nothing much except contempt and impatience. Funny people. A bit like the national bird.

What personal risks did Mr Ferrier take, financially or otherwise in managing a monopoly.
The dairy farmers who pay for this extravagance must surely question the amount paid.

Hmmm. No wonder the payout is low. Fonterra busy lining their pockets at their expense - and fighting environmental restrictions to dirty dairying (and losing) in Environment Court over 'One Plan'. Greedy B's.


Fonterra borrowed $900 million to finance all those salaries

wats the farmers pay out

The general quality of the comments makes you wonder why anyone would bother coming to NZ for a top job.

Good call, its also why alot of us leave...

Hi Lindsay,
I think there would be a lot of people that would contribute for a one way ticket out of NZ
Economy of course

Feel free to leave at anytime

tanker driver $66,000. before tax.

Fonterra management staff in Auckland are building bigger and bigger empires at huge expense to the company. Instead of building teams of staff in cheaper NZ locations they continue to employ 6 figure staff in Auckland where the staff no little and care little about rural issues or farmers. The Aucklanfication of Fonterra is a big mistake for the company which will eventually see the farmers come into conflict with the corporate investment bankers that run it. When will farmers realise that most of these 2000+ CBD jobs could be done in the provinces heaps cheaper?

Says who? Farmers are highly skilled and educated people, they vote in who they see fit. It’s no one else’s business.

Maybe , but dairy farmers are continually subjected to a barrage of spin emanating from Fonterra headquarters.
It's the Mushroom theory: it always works.

Feed them horsesh*t and keep them in the dark.

The Environment Court , in the Horizons One Plan decision, chose to remark upon the fact that it was not credible that the dairy farmers, having adopted the Clean Streams Accord in 2003, were completely unaware of the need to limit nitrogen losses from leaching.
Yet fertiliser scientists pointed out in 2003 that keeping cows away from streams was mere window-dressing. The real cause of nitrogen enrichment of streams was the nutrient overloading of soils from very high stock densities, which in turn result from nitrogen fertiliser input, supplementary feed inputs , "dairy support" and failure to spread effluent over the ENTIRE property.

See how it works: dairy farmers were led to believe that a bridge and a fence, with some nice flax plants supported by Roundup spraying, would fix it.
PR bullsh*t, as the court suggested.

Fonterra employs many people across most NZ provinces. They have a huge shared services function in Hamilton, if anything they have been moving roles out of Auckland. There are many people in the plants across the country who will earn over 100K (not just auckland), when you take into account their collective agreement and overtime rates. Know your facts before you spout off about aucklandfication

Fonterra has 2500 staff in central Auckland, doing? Meetings and then having meetings about meetings and then... Out sourcing it to another company because Fontw HQ is a fat management layer. Oh, and they also have meetings about the fact they outsourced something. Very efficient. Guessing the new CEO agrees if he is cutting head office.

Sad to see him rewarded so much when his first knee-jerk reaction to a reduced economic forecast was cutting staff and reducing spending in safety related areas. They did pat themselves on the back for saving millions on ACC premiums for passing level 1 and later level 2 of the ACC accreditation scheme. Both levels are almost only related to paper processes with minimal evidence required of actually working (a lot) safer. Many processes are still just as unsafe as they were many years ago. The workers pay the price for management handouts.

Rampant greed, by milking the farmers and consumers.

As a Fonterra Shareholder I want the best people running my business... If that is what the market dictates a top CEO is worth then I am happy to pay him that...

In case you hadn't noticed Fonterra is the market, about 99% of it to be exact. In any case, paying the most doesn't mean you get the best people. There is a graveyard of formerly high flying companies killed off by egotistical and incompetent multi-millionaire CEOs. You guys on the farm do the hard yakka and the suited boys at HQ get the dough. Fonterra's days are numbered.

Are you talking about the NZ market? The price of milk in NZ is cheap as anything anyway, most people pay more for a blooody bottle of water!

The work they are doing overseas building markets is why NZ farmers are actually getting paid a decent price, alot of which ends up back in the NZ economy.

Absolutley distgusting.
Ive been with the company as an owner for 13 years, 4 kids and we just refinanced with bank ,last chance they told me.
Im so pissed ,Itold wife and she cried.

TAF is a clear path to lower price per kg of milk solids and boost the DIV return powered byt he retail arm of Fonterror. Once farmers have cashed in all the shares to investment institutions suddenly they will find out they are the ones getting farmed

That may be true , but a lower price for the raw milk will allow competition to develop. It can't happen soon enough, assuming that NZ wants the dairy industry to start pulling its weight in economic terms. NZ is definitely feeling the weight of the dairy industry in environmental terms.
And then there's the social impacts: when are we going to see those addressed?