FONTERRA ELECTIONS 2017 BOARD OF DIRECTORS CANDIDATE PROFILES

Transcription

1 FONTERRA ELECTIONS 2017 BOARD OF DIRECTORS CANDIDATE PROFILES

2 CONTENTS FONTERRA DIRECTORS ELECTION INTRODUCTION 1 ATTRIBUTES AND SKILLS 2 REPORT OF INDEPENDENT SELECTION PANEL 3 GOLDSACK Brent - Independent Nomination Process Candidate 6 MACFARLANE Andy - Independent Nomination Process Candidate 9 MONAGHAN John - Independent Nomination Process Candidate 12 NOTE ON CANDIDATE STATEMENTS Each Candidate Profile Statement contains a maximum of 1,000 words (excluding the Candidate Interest Statement) provided by the candidate. The Returning Officer and Fonterra Co-operative Group Limited note that shareholdings in Fonterra or other companies disclosed by candidates may include shares held by third parties in which candidates have a relevant interest as defined by the Financial Markets Conduct Act Any emphasis (including capitalisation, italics, bolding, underscoring and bullet points) has been added by the candidate. The Returning Officer and Fonterra Co-operative Group Limited accept no responsibility for the content, or accuracy of the content, contained in Statements supplied by candidates. Warwick Lampp, Returning Officer 2017 Fonterra Elections Freephone iro@electionz.com

3 FONTERRA DIRECTORS ELECTION INTRODUCTION Voting is now open for the election of THREE (3) Directors to the Fonterra Board. This year there are three candidates; Independent Nomination Process candidates Brent Goldsack, Andy MacFarlane and John Monaghan. Brent Goldsack, Andy MacFarlane and John Monaghan were nominated by the Fonterra Board after being recommended by the Independent Selection Panel. The process for their nomination was supported by the Shareholders Council in accordance with the Independent Nomination Process. The Fonterra Board has provided details of the Attributes and Skills the Board is seeking in the 2017 Directors elections (pages 2-4 of this booklet). The three candidates recommended by the Independent Selection Panel have been assessed against the desired Skills and Attributes. The Independent Selection Panel Report outlining the process followed is on page 5 of this booklet. The Panel s assessment of their three recommended candidates is included prior to each of these candidate s Profile Statements. The Self Nomination Process allowed any Fonterra Shareholder (with the support of not less than 35 different Shareholders) to put themselves forward as a Director candidate and be considered for election by their fellow Shareholders alongside the previously announced Independent Nomination Process candidates. No candidates have stood through the Self Nomination Process in First Past the Post Majority Voting To be elected to the Board, more than 50% of the valid votes cast in respect of a candidate must be votes in favour. Each Shareholder can vote Yes for up to three of the candidates (but can choose to vote Yes for none of the candidates, or for only one or two of the candidates). If not all of the candidates obtain 50% support: Another election must be held for the unfilled positions. Shareholders Council will have discretion to set rules for a second election depending on circumstances at the time the focus will be on the most efficient process. If it sees a need, the Board can use its constitutional power to make a temporary appointment to fill the vacancy until the next election (but may not appoint an unsuccessful candidate). Fonterra Director Candidate Meetings Fonterra Shareholders have the opportunity to meet and ask questions of the Director candidates at seven meetings throughout the country. Chaired by the Chairman of the Fonterra Shareholders Council, these meetings provide a setting in which candidates meet with and answer questions from Fonterra Shareholders with a focus on explaining how their governance skills and attributes meet the requirements of the Co-operative. The format of the meetings will be that of a panel discussion whereby candidates are first provided an allotted time to introduce themselves before the Chair takes questions from the floor and moderates. The dates and locations are as follows: Date Time Location Venue Monday, 16 October 10.30am Invercargill Ascot Park Hotel, Cnr Tay Street & Racecourse Road, Invercargill Monday, 16 October 7.00pm Ashburton Ashburton Hotel 11/35 Racecourse Rd, Allenton, Ashburton Tuesday, 17 October 10.30am Palmerston North Palmerston North Convention Centre, 354 Main St, Palmerston North Tuesday, 17 October 7.00pm Stratford Stratford Golf Club, Pembroke Road East, Stratford Wednesday, 18 October 11.00am Rotorua Novotel Hotel, Lake End, Tutanekai St, Rotorua Wednesday, 18 October 7.00pm Hamilton Mystery Creek Bledisloe Building, 125 Mystery Creek Rd, Hamilton Thursday, 19 October 11.30am Whangarei The Barge, 474 Maunu Road, Whangarei BOARD OF DIRECTORS - CANDIDATE PROFILES PAGE 1

4 ATTRIBUTES AND SKILLS All of our Directors must believe in and value the Co-operative and be able to demonstrate that they have the attributes and skills needed to deliver governance at a level expected for a global dairy business. Directors on most boards operate within a band of governance experience, from the most experienced through to those who are newer to the particular role, organisation or industry. Over time, newer directors gain more experience and this helps ensure that there is succession on a board as well as a range of views and perspectives. In order to attract the best candidates for our Board, we will need to access the attributes and skills that we know are in our farmer shareholder base that will result in the right balance of experience and ability on the Board over time. It is important for potential candidates and for all our farmer shareholders to be clear on what is required on our Board to deliver the necessary performance and to set up our Co-operative for success in the future. Based on our discussions during the Governance and Representation Review and the extensive work we have done on what makes for a well-functioning board, the Board has identified a list of attributes (described below) that each Director of our Co-operative must be able to demonstrate. For some of these attributes, a Director will continue to develop expertise but it is important that they are able to show that they have the attribute and the ability to keep developing in their role as Directors of our Co-operative. In addition to these required attributes, our Board requires a set of skills to deliver good governance. There is no expectation that each Director will have all of these skills but it is important that they are appropriately represented across the Board. Some Directors will have strengths in some of the skills while others might be still developing them or will be able to rely on fellow Directors to provide guidance and expertise in particular areas. A Director needs to demonstrate each of the attributes but does not need to be able to demonstrate each of the skills. The key requirement for a Director is that they are able to meet the governance requirements at the level required for our Co-operative. From time to time, we will identify particular skills that may be needed on the Board. Attributes We consider that there are certain attributes that all of our Directors must be able to demonstrate. These are: Understanding of and commitment to the highest standards of governance including an understanding of the collective group decision making processes adopted by the Fonterra Board Understanding of and empathy with the Co-op Ability and knowledge to comprehend the wider commercial and economic framework in which Fonterra operates Broad governance experience Proven track record of creating value for shareholders Global perspective Time available to undertake a Director s responsibilities Sound judgement Ability to apply strategic thought to important issues Ability to constructively question, challenge and critique Unquestioned honesty and integrity. It is also important that the skills required for our Board take into account the types of opportunities and challenges that the Co-operative will face in the future, and ensure we are developing the skills that may not be needed currently but will be critical going forward. This means that the search for skills on the Board should always be looking to extend and build on current expertise. It is very unlikely that the Fonterra Board Skills List (described below) will at any given point in time show that all skills are currently being delivered it should show the aggregate skills that are shared across the Board as well as the skills that will be needed to deliver on the strategy in coming years. This approach has resulted in a balanced mix of skills related to the current requirements of the Co-operative, which will continue to be enhanced to match Fonterra s future requirements. PAGE 2 BOARD OF DIRECTORS - CANDIDATE PROFILES

5 Skills List Our strength as a co-operative relies on us being able to maximise the opportunity for our farmer shareholders to move from their farming businesses to the board room. An appreciation of the experience and skills required to make that transition and access to adequate training are essential for any farmer shareholder who wants to become a Fonterra Director. We expect our Board to include Directors with on-farm dairy knowledge based on having run or owned a dairy operation as a member of our dairy Co-operative, who are well versed in what drives Fonterra s Farmgate Milk Price and the profitability in our global Co-operative, and who demonstrate strong co-operative values. For a number of Directors Elections, we have used a skills list made up of the skills the Board requires to govern Fonterra- a complex, international Co-operative, operating in multiple markets, answering to diverse stakeholders, and delivering value to its owners. This skills list has been updated regularly and published in Farm Source and the documents for the Directors Elections each year. The list has also been used to help with the selection and appointment of our Independent Directors. In addition to keeping the skills list updated, the Board has considered the relative weighting of how much of each skill is needed on the Fonterra Board. This weighting can be used to establish how much of each skill we need on the Board over time (ie. how many Directors need to exhibit each skill and to what level). Skill Category In Depth Dairy Farming Experience Dairy Industry/ Understand Value Drivers of Milk Price/ profit Financial Experience Risk Management Experience Global Manufacturing/ Commodity Experience Global Consumer Experience CEO Experience of large operating business (>$1bn) Commercial/ Value creation track record Global Experience/ Understanding Technology Strategy and Governance Definition Has deep on farm dairy knowledge, having run or owned a dairy operation as a member of our dairy Co-operative. Well versed in and has in-depth expertise in what drives Fonterra s milk price and of the profit drivers of the global Co-operative. Has strong financial skills and knowledge gained through business management or is a highly experienced auditor, or has functional expertise in a senior financial position to make them a qualified financial expert. Has had senior level experience in, or has advised at a high level to organisations that have significant risk management including reputational risk management. Has experience running manufacturing assets in order to maximise financial return/or experience at a senior level in a global commodity business. Has had a senior level role in a consumer-oriented, retail or consumer goods company with significant global brands. Has functional experience as CEO of a large operating business and has had involvement in developing strategy and leading implementation. Has had experience in human resource/ people management. Has been the primary person responsible for driving significant value creation of either a private or public organisation. Has a deep understanding of international issues, has had on the ground experience in Asia or other emerging markets, or has a proven global mindset. Has knowledge and experience in the governance, strategic use and risk management of technology including information systems. BOARD OF DIRECTORS - CANDIDATE PROFILES PAGE 3

6 Skills Matrix The Fonterra Board has produced a Skills Matrix. The purpose of the Skills Matrix is to show: the aggregate skills of the current Board for each skill the required level of that skill across the whole Board and the desired level of that skill The Board has determined these required and desired levels based on the right mix of skills to govern Fonterra currently, the present composition of the Board and the future strategic needs of the business. The Skills Matrix uses blue horizontal bars to show the current aggregated skill of the Board. The whole of each blue bar represents the current Board s aggregated level for each skill, and the lighter shading within those bars represents the skills of the directors who are retiring by rotation in the current year (but eligible for re-election). The darker shading represents the skills of directors who are not retiring in The Skills Matrix will be provided to prospective candidates and to farmer shareholders to show them the skills that the Board is looking for over time, and should be used as guidance. The Skills Matrix was supplied to the Independent Selection Panel to assist them as they assessed the best candidates for the Board, and the Matrix will also provide useful information for farmers when making voting decisions. Based on this Skills Matrix (see below) the Board has prioritised a list of targeted skills for the Board: (a) Global Experience/Understanding (b) Financial Experience (c) Risk Management Experience; and (d) Global Consumer Experience Skills Matrix Aggregated Skills of existing Fonterra Board In Depth Dairy Farming Experience Dairy Industry/ Understand Value Drivers of Milk Price/ profit Financial Experience Risk Management Experience Global Manufacturing/ Commodity Experience Global Consumer Experience CEO Experience of large operating business (>$1bn) Commercial/ Value creation track record Global Experience/ Understanding Technology Strategy and Governance Aggregated skills of existing Fonterra Board Skills of Directors not retiring in 2017 Skills of Directors retiring in 2017 (but eligible for re-election) Required skill level Desired skill level PAGE 4 BOARD OF DIRECTORS - CANDIDATE PROFILES

7 REPORT OF INDEPENDENT SELECTION PANEL Appointed In Respect of Fonterra Co-operative Group Limited (Fonterra) Election of Directors Introduction This report sets out the 2017 process undertaken by the Independent Selection Panel (Panel) to rigorously assess and evaluate potential Farmer Director candidates and make recommendations to the Nominations Committee of the Fonterra Board (Nominations Committee) in respect of the upcoming Fonterra 2017 election of directors. The Panel was formed in 2016 by the Fonterra Board of Directors and the Fonterra Shareholders Council. The membership and operations of the Panel are independent of Fonterra. The Panel Members for 2017 are as follows: Dame Alison Paterson, Independent Chair appointed by the Panel members Mr John Spencer, Independent Member appointed by the Fonterra Board Mr Tony Carter, Independent Member appointed by the Fonterra Shareholders Council The objectives of the Panel are: To have high quality Farmer Director candidates nominated for election to the Board of Fonterra; and That Shareholders will be better informed in the electoral process Process Undertaken by the Panel The Panel met in July to: Appoint an independent secretariat to assist the Panel; Note the required attributes and skill requirements for director candidates; Agree the Panel Search Brief for director candidates; and Agree the timetable to be followed in respect of the 2017 process to be conducted. The Panel engaged search agents to assist in identifying suitable director candidates from the farmer shareholder base during the nominations period and to assist the Panel in their assessment activities, including contacting candidatenominated referees. Following review of the nominations received, the Panel decided to interview a short-list of the candidates that had applied. The Panel instructed the independent secretariat to arrange interviews with the selected candidates. The interviews were all conducted over a two-day time-period. Time was allowed for deliberation after each interview and following conclusion of all interviews. During the selection process, the Panel undertook a rigorous assessment of each candidate s attributes, skills and experience relative to those identified in the 2017 Candidate Handbook published by Fonterra, with particular regard given to the four targeted skills identified by the Fonterra Board in the 2017 Candidate Handbook. The Panel considers that the interview process was conducted in such a way that each candidate had the same opportunity to demonstrate why their attributes and skills meant they should be recommended by the Panel to the Nominations Committee of Fonterra for consideration as a director of Fonterra. The Panel unanimously selected three candidates to recommend to the Nominations Committee to stand for election as directors of Fonterra. These three candidates were considered to have best demonstrated all of the attributes and a range of the skills expected of directors of Fonterra (as described in the 2017 Candidate Handbook). When making the recommendation to the Nominations Committee, the Panel provided the Nomination Committee with the Panel s rationale for each candidate s inclusion and an overview of the Panel s assessment findings. Yours faithfully Independent Selection Panel Dame Alison Paterson Mr John Spencer Mr Anthony (Tony) Carter BOARD OF DIRECTORS - CANDIDATE PROFILES PAGE 5

8 Independent Nomination Process Candidate GOLDSACK Brent Independent Nomination Process Candidate Mobile: After being recommended by the Independent Selection Panel, Brent Goldsack was nominated as a candidate by the Fonterra Board. The process for his nomination was supported by the Shareholders Council in accordance with the Independent Nomination Process. Independent Selection Panel (ISP) Assessment Brent was born in Taranaki and raised on a dairy farm in Inglewood. He attended the University of Victoria, earning a Bachelor of Commerce degree, majoring in accounting, finance and commercial law. In 1993, Brent joined Coopers and Lybrand as a Tax Graduate, based in Wellington. He transferred to Moscow in 1996, as a Tax Manager focusing on corporate finance, Oil and Gas and Financial Services. In 1999, he transferred to London to work for the PwC Global Head of Banking and Capital Markets, where he specialised in taxation of credit derivatives and manufactured dividends. In 2000, Brent began working for a Private Equity client, Redwood Partners, as Finance Director, with responsibility for finance and UK FSA reporting for the Fund and due diligence on investments. The focus of the fund was technology, working out of London and New York. Brent arrived back in New Zealand in 2003 after 7 years overseas. He re-joined PwC as a Tax Senior Manager, and within 2 years was a Tax Partner at the age of 34. Brent has now been a Partner at PwC for more than 12 years, 9 of these in Auckland, and since 2013 in Waikato, as the local office s Managing Partner. While Brent has developed through Tax, he has had freedom to operate across lines of services, in particular corporate finance and Consulting. His focus at PwC more recently has been corporate finance. He has also advised many New Zealand corporates such as Elders NZ, Foodstuffs Auckland, Michael Hill International and many Private Equity funds. Brent is passionate about the dairy industry and has thought deeply about becoming a Director of Fonterra for some time. The Panel concluded that Brent rated well on each of the 11 Attributes outlined as core requirements to be a Director of Fonterra. With respect to the priority skills for 2017, the Panel makes the following comments: Brent has lived, worked and advised clients around the world. He takes a strong interest in global markets, and is a Managing Partner in a global Firm. With respect to financial experience Brent is a Partner at PwC, (accounting and advisory), and the Waikato office s Managing Partner. He is a Chartered Accountant and has lectured on International Tax at Auckland University s Masters of Tax programme. Brent exhibits a strong understanding of risk management, and is highly rated in this area by referees. Brent advises a number of New Zealand s leading companies on finance and risk matters, including global exporters and NZX listed companies. Brent does not possess a depth of experience in the consumer area, although has some exposure from client work. With respect to other Board Matrix skills, the Panel makes the following comments: Brent has been actively involved in three dairy operations in the Waikato over the last 8 years. Each operation has between cows. In addition, he has a minority shareholding in a 650 cow 300-hectare operation in the Lower North Island, and is a small shareholder in Canterbury Grasslands Limited, which is milking 20,000 cows (8,000 in Canterbury, 4,500 in Southland and 7,000 in Missouri, USA). Brent s farming operations have a strong focus on environmental sustainability. Two of his farms in the Waikato are part of the 14 farm Healthy Rivers program. Brent has extensive experience advising a number of dairy operations in relation to profitability, volatility (milk price and interest rates), people, succession and farming systems. He has assessed the impact and profitability of recent winter milk premiums and modelled competitive milk prices in the Waikato, and their components. He also advises international milk commodity traders in Asia. Brent has no experience in global manufacturing. While Brent has been the Managing Partner, Waikato at PwC since 2014, he has not been the CEO of a large operating business with revenues of >NZD 1billion in revenue. Brent has played a key role in leading PwC s Waikato office since 2014, which has grown significantly since then. Brent has been a Partner on the PwC NZ Board since 2013 and has considerable experience advising Boards. However, he lacks a depth of external governance experience as a Director, although has strong advisory experience in this area. References state that he has advised them well, and via this advice created significant value. Brent has gained solid technology experience and advises Finzsoft Solutions, a banking software company. PAGE 6 BOARD OF DIRECTORS - CANDIDATE PROFILES

9 Independent Nomination Process Candidate Candidate Profile Statement Born in Stratford, Taranaki and raised on a dairy farm in Inglewood. Married to Delwyn and have two daughters (9 and 12 going on 18), living just out of Hamilton. Why am I am standing? We must continue to have a strong Co-op. It is important to our families and New Zealand that the dairy industry continues to be owned by the farmers. The Co-op must deliver on its purpose. Collecting and processing our milk into the most profitable products, and exporting to the world. Farmers must receive the highest possible milk price. Regain the trust of New Zealanders, so that we continue to have a licence to farm, and more than that, New Zealanders becoming proud of Fonterra, the products we make and the way in which we do business. Ensure the investments we make deliver high returns to farmers, and enhance our global brand. I have the specific skills and experience that Fonterra requires: empathy with farmers, global experience, deep financial skills, mergers & acquisitions experience, and an understanding of risk management. I have the back bone, ability to read a situation, communication skills and courage to hold people accountable. I am experienced in dealing with passionate CEOs and leaders. I have a real passion for the Co-op. However, that does not mean that I am blind to the areas it can improve. Fonterra must earn the trust of farmers, communicate better with farmers, regulators and New Zealanders. Fonterra must lead the world in milk price, profit and environmental practices. Empathy with Farmers and the Co-Op Delwyn and I are actively involved in three dairy operations in the Waikato. Each has between cows, using a system 2/3, with a strong focus on profit. We also have a minority shareholding in a 650 cow 300 ha operation in the Lower North Island. We are small shareholders in Canterbury Grasslands Limited. Grasslands is milking 20,000 cows, 8,000 in Canterbury, 4,500 in Southland and 7,000 in Missouri, USA. A key difference I bring, is my wide experience advising a large number of dairy operations in relation to profitability, volatility (milk price and interest rates), people, succession and farming systems. We work with some of the best in the industry and also those under extreme pressure. Environmental sustainability is important to us as farmers and to Fonterra. Two of our farms in the Waikato are part of the 14 farm Healthy Rivers program and our operation on the banks of the Manawatu is a first mover as part of the Horizon One focus group. Finance and Risk Management Until September 2017 I was a Partner at PwC and was the Waikato Managing Partner. PwC is a global accounting and advisory firm. We have 1,400 people in NZ and 230,000 people globally. I advise a number of New Zealand s leading companies on finance and risk matters, including global exporters and NZX listed companies. Formal qualifications: Commerce degree (accounting and finance ) from Victoria University Completed three papers on cows and grass from Massey (towards a post graduate diploma) Chartered Accountant Lectured on International tax at the Auckland University Masters of Tax programme, and Completed a short course at INSEAD University Business School in Singapore. Global Experience I had the privilege of working with PwC in Russia for three years (corporate finance, financial institutions) and one year in London (banking and capital markets). I left PwC to work in Private Equity as a Finance Director for 2.5 years, living in London and New York. I advise a number of clients who operate in global markets. I take a keen interest in global matters, including the Grasslands investment in the US, clients in South America, Asia and family in the UK. Understanding of Milk Price and Fonterra profit I understand all attributes of the milk price and have assisted Fonterra with the impact and profitability of recent winter milk premiums, and how competitive Fonterra s recent winter milk premiums are to other producers. We have also modelled Fonterra vs OCD milk prices in the Waikato, and their components. The results were stark. Fonterra suppliers are materially better off. I advise international milk commodity traders in Asia. In relation to Co-op profit, I understand finance and accounting to the highest level, and as a Taranaki boy, we like to make complex matters simple to understand. BOARD OF DIRECTORS - CANDIDATE PROFILES PAGE 7

10 Independent Nomination Process Candidate Governance experience I am an experienced governor, a member of the Institute of Directors and was on the Waikato Branch Committee for two years. I understand the four key pillars of governance. I have been accepted to the next Fonterra Governance Development Program. I currently advise the boards of a number major companies, City Councils and farming groups on commercial, people and risk matters. I was elected by the partners to the Board of PwC New Zealand in PwC NZ has become part of the PwC Asia Pacific group, and I was the Board s representative on the working group. PwC is very similar to a Co-operative. We have 124 owners working in the business. Inter-generational value, reputation and building trust in society are key to PwC s business. Current Governance roles: Canterbury Grasslands Limited: Advisor to the Board and Chair of the Finance and Risk Committee. Finzsoft Solutions Limited: Advisor to the Board, Member of the Remuneration Committee. Finzsoft is NZX listed providing banking software. Deosan Limited: Advisor to the Board. Deosan manufactures teat sprays (Teat-X) and detergent for the dairy industry. NZ National Fieldays Society Inc: Director and Chair of the Audit and Risk Committee Moko Club: Advisory Board member. Moko Club prepares under privileged children for primary school. The work they do is inspiring. Michael Hill International Violin Competition: immediate past Chair and current Trustee. I would be humbled to be elected to the Board of Fonterra, serving the farmers, continuing to build a strong sustainable Co-Op, and maximising our milk price. Candidate Interest Statement Listed below are details of all business, investment and other relationships I have with Fonterra Co-Operative Group Limited and its subsidiaries (the Fonterra Group ) (including as a supplying shareholder), or with any third party that transacts with the Fonterra Group or carries on business in competition with the Fonterra Group. Financial interest jointly with associated persons in Ngarua Dairy Limited, which holds 133,029 Fonterra shares. Partner jointly with associated persons in Kakepuku Farms (Fonterra) Limited, which holds 173,875 Fonterra shares. Kakepuku Farms L.P. also has a Growth Contract Milk in relation to approx. 200,000 milk solids. Shareholder, jointly with associated persons, in Longfields Investments Limited which holds 276,936 Fonterra shares. Shareholder, advisor to the Board, Chair of Finance and Risk Committee of Canterbury Grasslands Limited which holds 2,573,440 Fonterra shares and vouchers. Canterbury Grasslands Limited has two subsidiaries (Redlands Sharemilking Limited and Latitudes Farms Limited) supplying Fonterra under a 50/50 sharemilking arrangement or a mymilk contract respectively. Until 22 September 2017 I was a Partner of PwC, which provides accounting and advisory services to the Fonterra Group. To the best of my knowledge and belief the disclosures set out above are full and complete. PAGE 8 BOARD OF DIRECTORS - CANDIDATE PROFILES

11 Independent Nomination Process Candidate MACFARLANE Andy Independent Nomination Process Candidate Mobile: After being recommended by the Independent Selection Panel, Andy MacFarlane was nominated as a candidate by the Fonterra Board. The process for his nomination was supported by the Shareholders Council in accordance with the Independent Nomination Process. Independent Selection Panel (ISP) Assessment Andy completed a Bachelor of Agricultural Science degree at Lincoln University in He then became a farm management consultant in Ashburton, and has since developed a reputation as a highly regarded rural and farm adviser. In 1987, Andy, along with 3 others, founded a farm advisory business, as well as Agricom, an entity that funds, breeds and grows New Zealand seed cultivars for New Zealand and international feed systems. Andy and his wife began farming in 1989, purchasing their first dairy co-operative shares in Andy s farming interests currently encompass multiple equity partnerships. In 1997, Andy sold his shares in Agricom, formed Macfarlane Rural Business Ltd, and concentrated his time on advisory, commercial property and farming. He and his family live near Ashburton on Pencarrow Farm, which has a high profile for its strong environmental record. He also owns a share in Deebury Ltd, milking 3000 cows, and Kintore, milking 1540 cows. Andy has served as a Director of Edgewater Hotel (Wanaka) since 1989; is the Past President of the New Zealand Institute of Primary Industry Management (responsible for New Zealand Rural Professionals) and chaired Deer Industry New Zealand for seven years. He is currently a Councillor of Lincoln University, a Director of AgResearch, Ngai Tahu Farming and ANZCO, New Zealand s 5th largest exporter with a turnover of around NZD1.5B. The Panel concluded that Andy rated well on each of the 11 Attributes outlined as core requirements to be a Director of Fonterra. With respect to the priority skills for 2017, the Panel makes the following comments: Andy undertakes global benchmarking in his own business and farming systems. He travels internationally to ensure he is aware of global trends, benchmarks and developments in farming. He is an active member of the International Farm Management Association (IFMA) and a member of Global Dairy Farmers. Via these organisations, Andy has visited and studied agriculture in the USA, Canada, Brazil, Argentina, Australia, China, Vietnam, Thailand, Russia, Poland, Netherlands, UK and Ireland. He also completed the UK Institute of Agriculture Rural Leadership Course as the first non-uk participant. With respect to financial experience, Andy is a member of the Audit & Risk Committee for most Boards where he is a Director, and demonstrates sound financial skill and experience. With respect to risk management Andy has advised farming families for the past 36 years on the growth and profitability of their land and rural investments. With respect to Consumer experience, Andy is the former Chair of Deer Industry New Zealand, which has a governance structure of 50% producers and 50% processor/marketers. In addition, Andy has been exposed to consumer products via ANZCO s Food & Solutions business. With respect to other Board Matrix skills, the Panel makes the following comments: Andy s farming and extended rural experience is, as covered above, broad and extensive. He was able to demonstrate extensive understanding of the value drivers of milk price/profit. He has had a level of exposure to manufacturing through his work with ANZCO and the Deer industry. While Andy has led his own business, it is not >NZD1 billion in revenue. Andy s career has been based on creating value for his clients and shareholders. He has an acute sense of analysis, and ability to assess risk, and to drive strategies that create value. He has solid experience, having spent a long period of time advising at a production level, then in governance, at ANZCO, one of New Zealand s largest and most successful exporters. This has honed his exposure in how to create, maintain and fight for returns in low margin businesses, subject to risk in global markets, exchange rate, and biological risk at a supply level, mainly from climate variables. His role as Director at Ngai Tahu Farming requires balancing commercial objectives with a requirement to meet social and environmental objectives. The businesses Andy is involved with have been early adopters of technology. He appears to understand the key drivers for use of technology, particularly for environmental and communication purposes. BOARD OF DIRECTORS - CANDIDATE PROFILES PAGE 9

12 Independent Nomination Process Candidate Candidate Profile Statement My interest in the agrifood sector was triggered late in high school by family, prompting me to complete a Bachelor of Agricultural Science at Lincoln University. I have been a farm management consultant for 36 years, and formed Macfarlane Rural Business Ltd with partners in With the assistance of my wife Tricia, and in partnership with my brother and his wife, we started farming sheep and beef in That year, we also commenced another equity partnership and completed our first dairy conversion, along with the purchase of our first dairy co-op shares. Our farming interests now encompass multiple equity partnerships. We live near Ashburton on Pencarrow Farm which has a high profile for its environmental record. I have been active in Governance since the late 1980 s. I serve as a Director of Edgewater Hotel (Wanaka) Ltd, am a past president of the New Zealand Institute of Primary Industry Management (responsible for New Zealand Rural Professionals), and have just retired as chair of Deer Industry New Zealand. I am a councillor of Lincoln University, and a director of AgResearch, Ngai Tahu Farming and ANZCO (New Zealand s fifth largest exporter). I was a founding partner in Agricom. I have been active in forming equity partnerships owning commercial property, which have served as a useful succession planning and risk management tool for farmer investors. 36 years of advising farming families on business growth and profitability, and achievement of their personal objectives has been matched with 28 years of farming in a fast changing Canterbury environment. That combination of experience grounds my thinking from a producer perspective, and has honed my senses around risk management and opportunities. In latter years, my role as chair of Deer Industry New Zealand has allowed me to focus on what is good for an industry and the collective good, rather than just the family I serve or advise. A key attribute of the Deer industry is its governance structure of 50% producers and 50% processor/marketers. That structure has concentrated my mind on the importance of focusing on the risks and rewards from aligning production to market opportunities and returns. I have had a long period advising (at a production level), then in governance, at ANZCO, who are one of New Zealand s largest and most successful exporters (approx $1.5B turnover). That involvement has created higher learning opportunities and experience in how to create, maintain and fight for returns in a very low margin business that is subject to various forms of risk. ANZCO, under the leadership of Sir Graeme Harrison, has also been successful in fighting for value creation beyond stage one processing. Two other key roles as a director of AgResearch and as a councillor at Lincoln University also rely for profit on a similar operating model. That model is units of throughput multiplied by contribution margin per unit. That stark economic reality often conflicts with the long term goals and requirements for research and education, which are often more important than short term profitability from a long term, national perspective. A long term measure of success is the national outcome as it relates to the food sector. Likewise, my role as a director at Ngai Tahu Farming requires balancing of strict commercial objectives with a requirement to meet social and environmental objectives for a wide group of stakeholders that represent a good cross section of New Zealand society. Ngai Tahu whanau are highly engaged in the management of, and outcomes from, their asset. Note that some equity partnerships I am associated with supply A2 milk to Synlait. Those partnerships, under my guidance, made a strategic decision a number of years ago, that a market opportunity existed for A2 milk. At that time, no New Zealand processor was interested in A2 milk. Subsequent events have resulted in Synlait processing A2 milk, and hence some equity partnerships have elected to sell A2 milk to Synlait. Equity partnerships associated with our family also produce venison, beef, lamb and arable crops. From an ownership, management, and governance perspective I focus on optimizing farming systems that deliver good outcomes for each piece of land. Whether building service companies, farming companies, property companies, food processing and marketing, or research and education, my whole career has been based on creating value for shareholders in the strict sense, but other stakeholders in the wider sense. Those stakeholders benefit from the social, environmental, and recreational wealth that result from well planned and balanced growth. That range of experience has instilled in me, an acute sense of analysis, ability to assess risk, and to drive strategies that create value. My passion is linking the global opportunities with on farm potential, across multiple land uses. In order to do so we must also value our New Zealand stakeholders, and continue to broaden our engagement and mutual understanding with them. There are few New Zealand companies that have created the opportunity to scale that opportunity. I consider myself fortunate to be a significant shareholder and supplier in one (Fonterra) and a governor and supplier to another. The co-operative nature of Fonterra is critical, in that it locks in that link between supplier wealth and value creation opportunities for a product that must be collected every day. At this stage of my career I have a good balance of experience and knowledge, while retaining my well known passion and energy. I value the opportunity to contribute to a co-operative at the heart of New Zealand s future. PAGE 10 BOARD OF DIRECTORS - CANDIDATE PROFILES

13 Independent Nomination Process Candidate Candidate Interest Statement Listed below are details of all business, investment and other relationships I have with Fonterra Co-Operative Group Limited and its subsidiaries (the Fonterra Group ) (including as a supplying shareholder), or with any third party that transacts with the Fonterra Group or carries on business in competition with the Fonterra Group. An associated entity Kintore Farm Ltd is a supplying shareholder and holds 813,049 Fonterra shares. An associated entity, Fernside Holdings and Deebury Pastoral Partnership, and its subsidiary companies, Stoneybeck Holdings Ltd, Brockbank Holdings Ltd and Cloverfields Ltd, is a supplying shareholder and holds 1,072,689 Fonterra shares and 9,317 units. An associated entity Windwhistle Pastoral Ltd is a supplying shareholder and holds 39,000 Fonterra shares. An associated company Pencarrow Farm Ltd supplies A2 milk to Synlait Milk Ltd. Pencarrow Farm Ltd retains 120,000 Fonterra units. An associated company Riverbank Farm Ltd supplies A2 milk to Synlait Milk Ltd. A subsidiary company of Fernside Holdings Ltd and Cloverfields Ltd supplies A2 milk to Synlait Milk Ltd. I am a Director of AgResearch, who supply milk to Fonterra, and may supply research services to Fonterra. I am a councillor of Lincoln University who supply milk to Fonterra, and may supply research services to Fonterra. I am a Director of Ngai Tahu Farming, who supply milk to Fonterra and Synlait. I am a shareholder, director and founding partner of Macfarlane Rural Business, who provides advice to farmer suppliers of Fonterra and other dairy companies. An associated person, John Macfarlane is a director and shareholder of My Farm Ltd, who promote equity investments who supply Fonterra. To the best of my knowledge and belief the disclosures set out above are full and complete. BOARD OF DIRECTORS - CANDIDATE PROFILES PAGE 11

14 Independent Nomination Process Candidate MONAGHAN John Independent Nomination Process Candidate Mobile: John Monaghan was endorsed as a candidate by the Fonterra Board. After being recommended by the Independent Selection Panel, John Monaghan was nominated as a candidate by the Fonterra Board. The process for his nomination was supported by the Shareholders Council in accordance with the Independent Nomination Process. Independent Selection Panel (ISP) Assessment John Monaghan grew up on a dairy farm, and has had farming interests in Canterbury, New Zealand and Victoria, Australia. Currently he has farming interests in Wairarapa and Otago. John has been involved with dairy co-operatives since the late 1980 s. He was Chair of Fonterra s Shareholders Council, prior to being elected onto Fonterra s Board in Over his nine years as a Director of Fonterra John has been a member of multiple Board Committees. He currently chairs both the Co-operative Relations Committee and the Milk Supply Growth Working Group. John is also currently a member of the People, Culture and Safety Board Committee. In addition, he has been a Director of Centreport Limited since 2010, as well as the related Centreport Properties Limited, which have broadened his governance experience. John also holds a number of farming Directorships. He was referenced as a respected and high contributing member of multiple Boards. The Panel concluded that John rated highly on each of the 11 Attributes outlined as core requirements to be a Director of Fonterra. With respect to the priority skills for 2017, the Panel makes the following comments: John has a strong understanding of the global complexities of Fonterra s operations around the world. It was noted that John regularly represents Fonterra overseas, and has been called on to do so consistently during his tenure on Fonterra s Board, having now travelled to most markets where Fonterra operates. He has, over time, built strong networks domestically and internationally with key stakeholders. With respect to financial experience, while John is not a qualified accountant, he exhibited a solid understanding of the financial complexities in which both Fonterra and Centreport operate. While John has not been a member of the Audit Committee at Fonterra, he has been a member of the Risk Committee. Given John s deep understanding of the dairy industry, and his understanding of the businesses global operations, he was rated at a high level on risk management, and as thoughtful on the key risks that Fonterra is managing at this time, and will manage into the future. While John does not have the benefit of an FMCG/ Consumer background, his travel to international markets and time on Fonterra s Board has given him a solid level of exposure to Fonterra s consumer and foodservice business, including its risks and opportunities. With respect to other Board Matrix skills, the Panel makes the following comments: John has deep on farm dairy experience having grown up on a farm, run and owned dairy farm operations for over 40 years and as a current farm owner and investor. As an experienced Director of Fonterra John demonstrates a strong understanding of the value drivers of milk price and earnings. In addition, John s Chairmanship of the Shareholder s Council and current role as Chair of the Co-operative Relations Committee has provided him with a deep understanding and extensive involvement in communicating with the farmer base. While John does not have hands on manufacturing experience, he demonstrated a strong understanding of the operations of Fonterra s business from a manufacturing and global trade standpoint. John has not been a CEO of a large operating business, so does not have experience in this area. Having said this, he has learned about business from developing his own farming interests, and has a strong love of learning and intellect to support his learning. John s value creation track record is linked to his personal farming interests and his significant contributions as a Director of Fonterra and at Centreport, as supported by reference checking. It was clear to the Committee that John understands which decisions create value as a Director, and which do not. John has developed a solid understanding of how technology can be leveraged and cause disruption, and understands the strategic uses of technology and information systems. PAGE 12 BOARD OF DIRECTORS - CANDIDATE PROFILES

15 Independent Nomination Process Candidate Candidate Profile Statement Every year I have been on the Fonterra Board, I have seen our Co-op grow stronger. Maintaining that momentum, while still protecting the strength of our Co-op, is the challenge that lies ahead. The world never stands still. Things don t stand still on the farm and they don t stand still in our Co-op. So it is vital that we build on the current momentum of transforming Fonterra into a global leader. Fonterra farmers are world leaders in farming and in efficiency. Fonterra was formed to harness the collective value of our milk to grow wealth for our farmers. As a Fonterra director that s what gets me out of bed every morning. With your support in this election, I will continue to work with my colleagues to fulfil our Co-op s potential by: HELPING TO STRENGTHEN OUR GOVERNANCE As Fonterra becomes more globally relevant, serving as a Director becomes more and more complex. Our Co-op is dynamic. It needs dynamic Directors. I have been encouraged by fellow directors to stand for another term because we have lost considerable governance experience, knowledge and understanding in our farmer directors over recent years. Partly this has been natural attrition, but also because many experienced farmers in our shareholder base have been reluctant to stand because of the political nature of the election process. Last year we took a big step forward with the review of the director election process. Now we are beginning to see experienced candidates emerge, shareholders with significant governance experience who will not have to learn on the job. If elected, this will be my last term as a Fonterra director, so I want to use the next three years to continue to do everything I can to encourage these people to come forward and to pass on any knowledge and understanding I have gained as a Fonterra governor during my years in office. Our Fonterra farmer directors need to be first class governors if our Co-op is to truly fulfil its potential. LOOKING AFTER OUR CO-OP WHILE STAYING COMPETITIVE IN GLOBAL MARKETS In my view looking after our Co-op and driving it hard must always be our number one priority. As Chairman of the Board s CRC and the Competitive Milk Price Working Group I have a close involvement at the heart of our Co-op, addressing issues that touch our farmers every day. It is great to see Farmsource starting to encourage a much stronger connection between our farmers and their Co-op. Our shareholders now have easier access to regional management and shareholder councillors who can give you answers, or put you in touch with someone who can. The involvement of our farmers, as owners of the business, is vital in this fast changing environment. Keeping you abreast of our strategy is fundamental and the Farmsource connection has the potential to make a big difference. We have more great plans for the next couple of years that will build even greater economic benefit on farm and lift our service to you as suppliers and owners to a new level. You have my commitment that we will continue to leverage our Co-op s strengths in new and innovative ways for the benefit of our shareholders. In recent years we have invested significantly in the Ingredients business and we are seeing the benefits of increased manufacturing options at peak. Now it is a matter of keeping pace with today s level of change and taking the opportunities in this important part of our business. But nowhere is this more relevant than in our Consumer and Foodservice business. We have an ambition to shift 10 billion litres of milk into our Consumer and Foodservice businesses by 2025 to capture higher returns for our shareholders. Some 576 million litres have been transferred in this last year. Our most recent investments have been in these businesses. But from a Board perspective, the overriding objective is to continue to build resilience across the business. TAKING THE HARD DECISIONS For our Co-operative to fulfil its potential, directors have to be prepared to take the hard decisions. At every Board meeting we consider issues that require each of us to exercise our judgment and to make decisions. Balanced understanding and considered risk taking are essential to grow our position in world dairy markets. You can be assured that I will continue to take the hard decisions to provide the right outcomes for Fonterra and us as farmer shareholders. BOARD OF DIRECTORS - CANDIDATE PROFILES PAGE 13