Westland Milk shareholders to vote on shrinking board, tightening selection rules

Westland Milk Products shareholders are to vote on shrinking the board and improving selection processes after criticism that followed the cooperative's $14.5 million loss last year.

Shareholders will vote on Oct. 5 on a series of measures including reducing the board to eight from 11, with a corresponding drop in shareholder-elected directors to five from eight. They will also be asked to approve measures to create a 'pipeline' of future directors and a more transparent process for the board to appoint the independent directors.

Westland reported a net loss of $14.5 million in the 12 months ended July 31, 2016, as its gross margin fell by about 17 percent and expenses rose. Its payout for the 2015-16 season of $3.88 per kilogram of milk solids was the lowest of any New Zealand dairy company payout. At the time, former chair Matt O'Regan blamed the poor result on a strong kiwi dollar, weak prices and a higher cost structure necessary to support the company's value-added strategies and lower-than-forecast sales of those products.

Current chair Pete Morrison said the proposals follow an extensive governance review of the company that was sought by shareholders at last year's annual meeting following criticism of the then board for its performance. The 'Westland Governance Review' was accepted by the current board at a meeting last month and now needed to be ratified by shareholders, he said in a statement.

The proposals have some of the elements of Fonterra Cooperative Group's governance review that resulted in a plan to reduce its board to nine from 13. While a majority of Fonterra's farmer-shareholders supported a proposal to shrink the board at the 2015 annual meeting the vote fell short of the 75 percent. Fonterra is New Zealand's biggest business, with revenue of $17.2 billion in 2016. Westland's 2016 sales were $588 million.

(BusinessDesk)