Embattled New Zealand dairy giant Fonterra has told employees earning more than NZD100,000 (US$63,556) their salaries will be frozen this year.
The cooperative’s CEO, Mile Hurrell, told employees in a letter: “This has been a tough call, but it’s also the right one.”
Quoting the company’s 2018 annual report, The New Zealand Herald newspaper reported more than 6,000 of Fonterra’s 22,000 staff were on salaries of NZD100,000 and over.
Hurrell’s letter said: “It’s been a challenging year for all of us. We are making good progress on our plan to turn our business around, and while we’re not there yet, I want to acknowledge and thank you for all the hard work you have been putting in to help lift our performance and reset the business for our future success.”
He said Fonterra’s management team and board had also taken the decision not to pay bonuses for the annual short term incentive scheme or sales incentive plans for for the FY19 performance year.
But he said a remuneration review will still occur for salaried employees earning less than NZD100,000 and there is no impact on waged employees who are part of a collective agreement.
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By GlobalData“Together as a cooperative we must do what’s right, working together to reset our business and get us back to a position where we can be proud of our financial performance,” he added.
“While some of you won’t be surprised by this decision, I understand it is difficult news to hear, especially when we’ve been working incredibly hard.”
The New Zealand Herald claimed last month former chief executive Theo Spierings received an incentive scheme payment of NZD4.67m when he left the job in August last year, despite the business soon after disclosing its first ever net annual loss – of NZD$196m.
The payment meant the Dutchman pocketed NZD$43 million in his seven years in the job, the newspaper reported.
Last month Fonterra, the world’s largest dairy exporting business, said it expected to make a loss for the second year running amid impairment charges on certain “overvalued” assets and announced it will not be paying an annual dividend to shareholders.
The reported loss for the year ended on 31 July has been put at NZD590m to NZD675m.
