QBE CHAIRPERSON OF THE YEAR: Sir Henry Van der Heyden; Governing through Transition

New Zealand Management, December 2012 | Go to article overview

QBE CHAIRPERSON OF THE YEAR: Sir Henry Van der Heyden; Governing through Transition


With a turnover of around $20 billion a year, dairy co-operative Fonterra is far and away our largest enterprise. And Henry van der Heyden, now Sir Henry, has been its governance helmsman since 2002.

This year, coincidentally his final as chairman of Fonterra, his leadership was tested. He faced two events that will significantly define the evolution of Fonterra. The first was the introduction and general acceptance by farmers of the controversial Trading Among Farmers (TAF) scheme designed to facilitate Fonterra's future capital raising needs. The second was his leadership of the recruitment and eventual appointment of a new chief executive.

Van der Heyden was a QBE Chairperson of the Year Award finalist in 2007 and 2010. He won the award this year because of his 10-year contribution which culminated in his leadership and resolution of these two critically important governance issues.

Fonterra's size and complex structure make it a difficult enterprise to govern. The company and its performance has its critics, both internal and external, because of its size, management of environmental issues, branding strategies and even its board composition and management structure. These, and a host of other issues, reflect the nature of the beast.

But Fonterra is a vital part of the New Zealand economy. "What needs to be recognised is that Sir Henry has done the hard yards and not walked away from the challenges the company has faced over the years," the judges said. "The success of Fonterra has been, and will continue to be, critical to New Zealand and in the past 12 months in particular, Sir Henry has led the board to secure that ongoing success."

Sir Henry personally led and fronted the campaign to convince farmers to adopt the TAF programme. Fonterra's 10,500 farmer shareholders have historically resisted moves to create a new capital structure, even one that will facilitate raising capital to redeem farmer shares without impacting Fonterra's cashflow or eroding remaining farmers' equity.

Against the odds, the board delivered a solution to a hotly debated corporate problem and Fonterra will issue $500 million investment units that will give non-farm investors access to the cooperative's dividend cashflow.

Fonterra traditionally had to buy farmers' shares when they left the industry. That presented cash demand problems. The TAF scheme is globally unique which, Sir Henry admitted recently, made it difficult to sell the concept to farmers "because they had nothing to compare it with". But he is convinced the company has "modelled it to death" and that it will answer both the farmers' concerns and the company's capital needs.

And while this campaigning was going on, Sir Henry had to meet the challenges associated with selecting and settling in a new chief executive. The choice and appointment of a new CEO is, after all, a critical governance assignment. Theo Spierings, former head of The Netherlands' Fonterra equivalent -- Royal FrieslandCampina -- seems from early indications to be a sound choice.

Fonterra accounts for 30 percent of the world's dairy exports which represent 95 percent of the country's milk production. Spierings calls this a "unique situation" and Fonterra a "unique co-op".

The TAF scheme is the Fonterra board's answer to striking a balance between dealing with redemption risk, maintaining 100 percent farmer ownership and offering external investors an opportunity to invest in New Zealand's perceived lucrative dairy industry. "And it was critical that the Fonterra board get it over the line," said the judges. …

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