Farmers remuneration for their workload is often very low compared to other professions, but the "love for the land' and historical asset growth compensated this shortfall for many.
But will farmers in the future work for peanuts when land values ease and profits fail to respond?
Many in the public sector receive huge remuneration packages that often seem exorbitant for those on the land. Proponents suggest the market soughts out the rate, but some big pay rates exist even in companies of poor performance.
Andrew Ferrier has been CEO of NZ biggest company and been in the helm when dairy has had a spectacular turn around in fortunes.
Are you happy with the $1.5million pay increase this CEO has received this year?
Fonterra's chief executive Andrew Ferrier got a $1.5 million pay rise last year even while the dairy company had a freeze on wages, as executives benefited from incentives paid for prior years. Ferrier’s total pay was between $5.1 and $5.11 million in the year ended July 31, assuming he is the firm’s highest earner, up from a $3.62 million-to-$3.63 million range a year earlier, according to the 2010 annual report. The 41 percent increase is his biggest since 2005, when Ferrier got a 53 percent increase reports Stuff.
"We had a salary freeze in place for senior management where we didn’t move the base salaries – what’s contributed to the rise was the incentive scheme” from the prior financial year, human resources manager Jennifer Kerr said. The 16-month pay freeze ended this month, she said. Ferrier’s pay rise reflected a 2009 financial year when Fonterra slashed debt and boosted distributable profit even as milk prices slumped amid the global financial crisis.
His pay has more than tripled since he took over as CEO in 2003 on an annual stipend of $1.64 million to $1.65 million and he has collected about $22.9 million in his seven years with the company.
The increases come in a busy year for Fonterra after it boosted net profit 12 percent to $685 million while cutting its net debt by $700 million. The dairy exporter, which has enjoyed a rebound in international dairy prices from a trough in July last year, reaffirmed its forecast pay-out at $6.60 a kilogram of milk solids and lifted its expected distributable profit to a range of 40 to 50 cents a share from 30 to 50 cents. It convinced shareholders to agree to a new capital structure that will introduce a fund letting them trade shares in the cooperative among themselves, as well as opening a pathway for outside investors to get exposure to Fonterra.
7 Comments
Sack the silly sod , and give his job to Wolly .
Save $ 5 million per year on the salary , less the cost of a few trailer loads of drift wood , and access to a watch repairer.
The business will continue as before , and the board meetings and press releases would be a cracking lot more fun .
This amount of remuneration is an insult to all the hardworking farmers who get up at all hours of the morning, rain or shine, and milk hideous cows.
Andrew Ferrier was in charge when Fonterra became one of the "worst" companies in the world over the sanlu debacle resulting in the sanlu investment being written off. This loss should have been deducted from A Ferrier 's pay!
The farmers all did well long before Fonterra came along, it may all look good at present but it could all change with a bit of chinese competition and remember Fonterra is now carrying a lot of debt.
Ex Farmers Wife.
Looks like someone has definitely being milking this firm.
Profits up $74m (mainly on global prices) so give $1.5m more to the CEO? Does that really best serve shareholders?
How much profit is directly attributable to Ferrier's performance?
Entitlements should be fair. Given an employee/CEO doesn't carry the same income risk that an owner/CEO does, a $5m package seems excessive - even for our largest business.
Their profits are up, but do those profits include investors who have invested money into it.
That sort of salary is obscene really, especially in these economic times. It is almost as if we haven't learn from the economic crisis. Most people wouldn't earn that sort of money in their whole life, let alone in a year.
What he earns in a week from working, is more than most people will earn in a year from working. There is something wrong with that.
As I have previously posted, I firmly believe that Fonterra is one of the worst run dairy companies in the world. In terms of operating efficiency, m&a activity, dividend yield, share price gain and payout it is a large fat monster. Murray Goulburn, Nestle and any number of foods companies would beat Fonterra on most true performance measures.
But that is what the farmers of NZ want a bloated monopoly with little incentive to perform, while they mope about any signs of true competition which DIRA does encourage.
However,
He is only paid a .004c per kgms that the group processes. That is far from a gouge on farmers. I doubt many farmers will go under because of this.
He would earn far far far more with ConAgra, Olam, Nestle or any international food company which has Fonterra's scale and market share.
He is unable to be paid in shares. Which effects is true after-tax payment compared to other private/listed company CEO remuneration.
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