F o n t e r r a

40The Chairman of the FVS Committee is Roger France.The principal activity of the FVS Committee is providingadvice to the Board on the setting of the Fair Valuefrom within the Fair Value range determined bythe Valuer, which the Board is required to do underthe Constitution. In order to fulfil this role the FVS Committeereviews information provided by managementto the Valuer, and interacts with the Valuer to theextent required to enable the Committee to obtain ahigh level understanding of the process used in thedetermination of the Fair Value Range.EXTERNAL RELATIONS COMMITTEEThe External Relations Committee is comprised ofthree Directors. The Chairman of the Committee isthe Chairman of the Board, Henry van der Heyden.The purpose of the Committee is to assist the Boardin building relationships with political contacts andinternational trade policy contacts as well as withselected joint venture partners.MILK PRICING WORKING GROUP (“MPWG”)The MPWG is comprised of four Directors, up to twoexternal appointees, and a Management representative,being the Director Fonterra Milk Supply. The currentChairman of the Working Group is Mark Townshend.The purpose of the MPWG is to assist the Board withthe development of milk pricing signals in co-ordinationwith the development of the capital structure.CANDIDATE ASSESSMENT PANEL AND GOVERNANCEDEVELOPMENT COMMITTEEIn addition to the Board Committees, the Boardand Shareholders’ Council agreed to establishthe Candidate Assessment Panel and GovernanceDevelopment Committee as joint initiatives to aid thedevelopment and assessment of future candidatesfor the Elected Director positions on the Board andprovide shareholders better information on the electoralprocess. The Panel is independently chaired by JohnPalmer and has two Directors and two Shareholders’Councillors as members. The Committee comprises twoBoard members and three Shareholders’ Councillors.Remuneration of DirectorsThe Directors’ Remuneration Committee (“DRC”), isindependent of the Board and the Shareholders’ Council,being separately elected by Fonterra Shareholders.Under the constitution, the DRC considers andrecommends for shareholder approval, the form andamount of remuneration for Elected Directors.The Board is responsible for setting remunerationof Appointed Directors, but generally follows theremuneration levels approved for Elected Directors.The Board is authorised to approve special remunerationfor a Director who is engaged to carry out work otherthan as a Director of Fonterra or where a Director iscalled upon to exercise special skills for the benefit ofthe Company.Shareholder Relations andStakeholder InterestsThe Board continues to promote the co-operativenature of the Company and reflects this in its dealingswith its supplying shareholders. This year has seen acontinuation of the Board’s programmes for fosteringand enhancing relationships with its supplyingshareholders.The Board and management have maintained regulardirect contact through a significant number of meetingsheld throughout New Zealand. These meetings havealso been supported by the Shareholders’ Council, FieldRepresentatives and the Fonterra Farmer Network.They provide an important forum for shareholders toengage with Directors and management and gain abetter understanding of the Fonterra business.The Fonterra Milk Supply Service Centre alsocontinues to provide an important service throughwhich shareholders can contact the Company to makecomments, or to raise questions or complaints, andensures that shareholders’ concerns are addressed.Fonterra also maintains the Fencepost website whichprovides a wide range of information and otherservices to shareholders, as well as a corporate Fonterrawebsite (www.fonterra.com) which contains generalinformation on the Company and is accessible to thegeneral public.Information DisclosureThe Board is committed to providing information to itsshareholders and other investors in a timely manner.The Board regularly reviews the expected payoutto suppliers, and communicates its best estimate.The Board also uses shareholder meetings to updateshareholders on the Company’s performance, andstrategic issues.Shareholders also receive information relating to the FairValue Share, annual and half-year financial results, andelections of Directors and Shareholders’ Councillors. Asa listed issuer of debt securities, Fonterra also keepsthe market informed of material information throughannouncements to the NZX.Shareholders’ CouncilThe Board has a significant and unique relationship withthe Shareholders’ Council, which is established underthe Constitution. The Council is independent of theBoard and comprises 46 shareholders, representing 25different wards, who are elected by the shareholders.The Council’s functions include reviewing the Board’sstatement of intentions for the performance andoperations of the Company, and commenting onreports from the Board on the Company. The Boardand Council share common interests in shareholderissues, which are generally addressed through the SRC,MPWG, or similar mechanisms.