In a statement published on the New Zealand website Scoop, two former board members, Colin Armer and Greg Gent, have put forward a notice of a proposal to the company’s AGM in late November for a reduction of board members from 13 to nine.

Gent, who was formerly deputy chairman of the company, said: “We want our co-operative to be more successful and globally competitive with a clear strategy to achieve that. Our businesses and livelihood depend on that.”

He went on to say: “We believe that a smaller board is essential to improve the governance and performance of the co-operative. Fonterra has performed well below the expectations of farmers who voted to form it had at the time. Accountability for company performance begins at the top with the chairman and board of directors.”

The pair said the large board was never seen as the optimal size when Fonterra was formed. Rather it was a pragmatic number, which facilitated the merger required to form the company in 2001.

“No passengers on the board”

Gent says a smaller group of directors will ensure that all directors are accountable for performance with no passengers on the board.

The press release stated that “lack of confidence in the company is now causing serious milk erosion to competitors and the commercial performance of the co-op is at an unacceptable level on both the dividend and the share price”.

“Continuing along the same path and hoping for a different result is unrealistic. So in our view, a fundamental change is needed at board level. That is also where we as shareholders can exercise our constitutional powers to make the changes we believe will benefit the company,” Armer and Gent added.

Armer claimed they discussed the proposal with a number of shareholders and had received overwhelming support.

If successful, their proposal requires the shareholders’ council to conduct an election for all six elected directors in March 2016.