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This week the board of Ornua as we know it up to now met for the last time and official nominations for the restructured board have been submitted. The new 16-person board will include six representatives with a farming background and 10 persons with an executive background that currently work or have recently worked in the industry.
The chief executives and chairs that were sitting at the board meeting this week will stay in position until the next meeting in early November. The new board members will gather for the first time in an official capacity for the November board meeting. The current board members will form an advisory board for Ornua that will meet four times per year.
The new board will have 16 members, one more than the current board. This new board will be made up of Ornua chair Denis Cregan, two newly appointed non-executive directors that have not yet been decided, two executives from Ornua, current CEO John Jordan, CFO Donal Buggy, and a nominee from eight co-ops that supply product to Ornua.
Dairygold, Glanbia and Carbery are effectively losing a seat each at the board as six seats from these shareholders are reduced down to three. Over the last number of weeks the shareholders that trade with Ornua have decided on their eight nominees.
New board members
Current Dairygold chair John O’Gorman and CEO Jim Woulfe will be replaced with Dairygold nominee Edmund Lynch, current Dairygold vice-chair.
Glanbia Ireland’s CEO Jim Bergin and former chair Martin Keane will be replaced with Glanbia nominee Diarmuid Lally. Carbery’s chair TJ Sullivan and CEO Jason Hawkins will be replaced with Carbery nominee Joe O’Sullivan, formerly of Drinagh Co-op and Carbery.
Aurivo’s new CEO Donal Tierney, who replaced former Ornua chair Aaron Forde, will be replaced with Sean Sweeney, who will resign from the Aurivo board to fill the slot.
Lakeland Dairies CEO Michael Hanley will be replaced with Lakeland Dairies nominee Sean Brady.
Tipperary Co-op CEO John Daly will be replaced with Tipperary Co-op nominee John Hunter of Moorepark Technology Limited. North Cork Co-op CEO Pat Sheehan will be replaced with nominee Michael O’Shea. Arrabawn Co-op CEO Conor Ryan will be replaced with nominee Jerry Houlihan.
The farm organisation representatives are the same as the existing board – Tom Phelan representing IFA, Pat McCormack representing ICMSA and Jim Russell representing ICOS.
What the board are paid
Ornua accounts for 2019 show the cost of running the board totalled €556,000 or the equivalent of €37,000 per board member on average. The six senior executives shared a pot of €4.1m in total.
Does the revamp go far enough?
The objective of the new board is to create distance between the shared marketing arm of Ornua management and the shareholding co-ops. Issues around conflicts of interest, shared markets and competition outside of Ireland have been around for years. This tension has intensified of late as individual co-ops grow bigger and wealthier.
In most other countries the shared marketing models have been disbanded. Individual processors drive their own product listing and marketing arm. The hybrid model we have in Ireland where some co-ops do their own marketing and some product is traded through Ornua struggles when partners are investing in resources on their own and through a shared marketing and processing platform.
This latest move to mix the representative ethos of Ornua and best in class governance by excluding senior co-op management might well help board tensions. The Ornua board have discussed this for the last two years so surely we hope they have been well advised in taking that decision.
What will it do for Ornua’s future product growth, value and product differentiation from other global brands is the big question? The danger or risk in this restructuring is it may even damage Ornua long-term as key decision-makers will not be as close to Ornua.
Why is Ornua important to all dairy farmers? Ornua exports over 60% of Irish dairy produce (butter, cheese, powders etc), much of it on the back of a very successful Kerrygold brand. Duplication of marketing cost, under-investment, poor research and innovation are unseen costs that could make dairy farmers have no choice but to accept lower milk prices.
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