$6m pay day for outgoing Fonterra boss

A UNION leader has expressed trouble reconciling Fonterra's decision to lay off 130 Cororooke plant workers after learning one of the company's bosses is set to receive a $6.4 million farewell handshake.

National Union of Workers Victorian branch secretary Tim Kennedy said it did not sit well that  former chief executive officer of  global operations Andrew Ferrier would be paid out $NZ8.2 million ($A6.4 million) when so many workers were losing their jobs.

“There is no reality between the value they bring to the company and the remuneration they take from it,” Mr Kennedy said of Mr Ferrier’s golden handshake.

Mr Kennedy said the 130 workers to be laid off from Cororooke would get a redundancy payout that would be proportionate to the length of service they had given the company.

He said Mr Ferrier’s handshake was vastly disproportionate to his contribution.

Golden handshakes such as Mr Ferrier received were “not sustainable,” Mr Kennedy said.

He said Fonterra’s decision to close the Cororooke plant was another example of how multi-national companies treated their workforces as expendable commodities as they pursued higher profits.

The amount of Mr Ferrier’s farewell handshake was  revealed last week when the New Zealand-based Fonterra Global, the world’s largest milk processor, presented its 2012 financial results in Auckland.

Mr Ferrier left last October after eight years heading New Zealand’s biggest company. 

He was paid between $4.9 million and $5 million, according to Fonterra’s 2011 annual report. 

His farewell payout appears to be the second highest on the New Zealand corporate record books. 

Fonterra Global chairman Sir Henry van der Heyden said Mr Ferrier’s payout was made up mainly of “payments for long-term and short-term incentives”. 

“I know it’s a lot of money but the core of any fundamental payment to our management is based on performance, so this is a wash up of long-term and short-term incentives,” Mr van der Heyden said. 

Meanwhile, Fonterra blamed competition, price discounting to support its market share and subdued consumer spending in Australia for a 20 per cent profit decline to  $NZ204m  ($A165m) by its Australia-New Zealand food business during 2011-12. After adjusting for the sales of the Western Australian dairy business last year, the company said that milk volumes  were down four per cent.

ehimmelreich@standard.fairfax.com.au

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