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Norgate looks set for another term at Fonterra

By Hugh Stringleman

Thursday 24th April 2003

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Farmers will know before the end of June whether Craig Norgate will be reappointed as chief executive of Fonterra Co-operative Group.

His initial two-year contract runs out in July and an appointments committee of the board has conducted a worldwide search for candidates for the $2 million-a-year position.

Mr Norgate has not confirmed that he has reapplied but has hinted he wants to carry on. It appears likely he will gain another term.

Views on his reappointment show a high degree of regional preference; support from those in the former Kiwi Co-operative Dairies area, while Waikato dairyfarmers hope that someone better has applied.

They agree, however, that this is the most important decision facing chairman Henry van der Heyden and his directors.

"The relationship between shareholders and their co-operative is at an all-time low," Dairy Farmers of New Zealand chairman Kevin Wooding said.

"Whoever is appointed must be a team leader with strong dairy marketing experience," he said. But Mr Wooding said it would not be proper for him to either endorse or reject Mr Norgate or another candidate.

"Dairy Farmers of New Zealand [a division of Federated Farmers] will be expecting Fonterra to lift its game rapidly and farmers need to swing in behind their company," he said.

Among matters of dissatisfaction recently have been a sell-down of stocks into declining world markets, the push for an environmental accord with regional councils and high expenditure levels on consultancies and senior salaries.

"Not that farmers begrudge Craig Norgate or whoever the top salary to do a top job," Mr Wooding said. "In my region they wouldn't be surprised if there was a change in CEO.

"They would be nervous if he was reappointed by default."

At this time no other confirmed candidates are known, amid speculation that the co-operative structure, dairy industry faction-fighting and the comparatively low salary package have discouraged international high-flyers.

Former deputy CEO Chris Moller left after a divisional restructuring and is now heading the New Zealand Rugby Union. Ironically the rugby-mad Craig Norgate stood down as a union councillor so he could devote more time to Fonterra.

New Zealand Milk head David Pilkington does have excellent international dairy marketing experience, a good profitable division and relates well to farmers. However, he missed out when Mr Norgate was appointed in mid-2001.

Chief operations officer Jay Waldvogel said he was not a candidate for the top job, after being tipped by the New Zealand Herald.

Mr van der Heyden and Mr Norgate said last December that they would make no further comment on the CEO appointment process until it was finished.

A senior Fonterra executive has said that Mr Norgate would not confirm publicly that he was seeking reappointment if there was a likelihood he would miss out. Instead he would withdraw behind the scenes, serve out his time and move on to something else. Aged only 38, he had plenty of prospects overseas, the source said.

In the end, it comes down to whether the Waikato-based van der Heyden has a good working relationship with Mr Norgate.

The Fonterra board meets on April 30 and May 1, and not again until July.

But a company spokesperson said the CEO appointment was not on the agenda for the next meeting. It was being handled by a committee and an announcement would be made before the end of June.

Dairy Farmers vice-chairman David Hopkins, of Wanganui, said Mr Norgate had strong support in his region.

"The industry can only have the best and so the salary dollars don't matter. One or two things he hasn't got right ­ probably only 7.5 out of 10 for performance. But Waikato has 40% of the industry and I hope they use that power wisely."

Former Kiwi chairman John Young of Taranaki says dairy farmers fear an outside appointee may not understand the co-operative principles.

"It is better to stick within our structure for chief executives, so Craig should have the inside running.

Lincoln University farm management and agribusiness professor Keith Woodford said he would be cautious about a CEO from overseas.

"It is far from clear to me that such a person would have the necessary insights to run Fonterra and management stability is very important at this time. In the final analysis reappointment will come down to whether the chairman is comfortable with his working relationship with Mr Norgate."

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