Corporate Governance: Ownership Structures and Board Models

This document analyzes the ownership structures and board models of three companies - Fonterra Cooperative Group, Sky Network Television, and Ngai Tahu Holdings Ltd. It explores the different models of corporate governance, including the Anglo-US model, German model, and Japanese model. The document also discusses the legal and social responsibilities of the board and provides recommendations for improving corporate governance.

Running head: CORPORATE GOVERNANCE
CORPORATE GOVERNANCE
Name of the Student
Name of the University
Author Note

1CORPORATE GOVERNANCE
Table of Contents
Introduction................................................................................................................................3
Ownership structure:..............................................................................................................3
Fonterra Cooperative Group:.............................................................................................3
Sky Network Television.....................................................................................................4
Ngai Tahu Holdings Ltd.....................................................................................................4
Models of Corporate Governance:.....................................................................................5
Anglo-US Model:...............................................................................................................5
German Model:..................................................................................................................6
Japanese model:.................................................................................................................6
Anglo-US model of Sky Network Television Ltd.............................................................7
Europe's two-tier model implemented on Fonterra:...........................................................7
Japanese model of corporate governance:..........................................................................8
Two Tier Model of Fonterra..............................................................................................8
SKY TV’s Principle based model......................................................................................8
Japanese Model of Ngai Tahu............................................................................................8
Discussion:.................................................................................................................................8
Legal responsibility of the board:..........................................................................................9
Compliance......................................................................................................................10
Ethical Behavior...............................................................................................................13
Treaty of Waitangi:..........................................................................................................15

2CORPORATE GOVERNANCE
Social Responsibility........................................................................................................16
Yearly Dividend Payout Ratio-SKY TV Network...............................................................18
Recommendations:...................................................................................................................20
Conclusion................................................................................................................................22
References................................................................................................................................23

3CORPORATE GOVERNANCE
Introduction
Bob Tricker in his bestselling book "Corporate Governance: Practices, Procedures,
Prowers" defines Corporate Governance as "The governance role is not concerned with the
running of the company, per se, but with giving overall direction to the enterprise, with
overseeing and controlling the executive actions of management and with satisfying
legitimate expectations of accountability and regulation by interests beyond the corporate
boundaries" (Tricker, Corporate Governance-Principles, polices, and practices, 2015). In this
project, the corporate structure and board models of 3 companies namely Fonterra
Cooperative Group, Sky Network Television and Ngai Tahu Holdings Ltd. are analyzed. The
unique feature of the Fonterra cooperative is that around 10,500 farmers own it. Sky Network
Television Ltd. is a media and entertainment channel of New Zealand. Ngai Tahu Holdings
Ltd. is an inter-generational investment company (Tricker, 2015).
Ownership structure:
In this part, the ownership structures of each of the three above-mentioned companies
have been discussed.
Fonterra Cooperative Group:
Fonterra is a world famous dairy company in New Zealand owned by more than
10000 farmers and their families. Since its foundation, it is dedicated to the best standards of
corporate governance and management (Fonterra, 2018). It was formed after the
amalgamation of New Zealand Dairy Group and Kiwi Dairy Cooperative and the New
Zealand Dairy Board. Institutional investors are generally the largest group participants and
they can have impact on the prices of shares by their buy-sell decisions Fonterra has
institutional ownership of 7.99% (NZSE:FCG Ownership-summary May 11th 18). Another

4CORPORATE GOVERNANCE
category of shareholders of the company is the company insiders. Fonterra though hold
minority stake in insiders, still being a large capital company, it is significant. General Public
ownership has around d 91.5% of shares in Fonterra (Fonterra, 2018). Thus, their shares are
very popular among retail investors. Private companies hold a meager amount 0.45% of
shares of Fonterra (Fonterra, 2018).
Sky Network Television
Sky Network TV Ltd, an entertainment company based in New Zealand. It is the
public listed company. It is listed as SKT on New Zealand Stock Exchange and Australian
Stock Exchange (SKY About us, 2018).. The board of directors of SKY Network is
appointed and elected by ordinary resolution at the annual general meeting of the
shareholders (SKY TV, 2018). As on 9 August 2018, there are 5 main substantial security
holders of SKY under "Financial Markets Conduct Act 2013". They are Kiltearn Partners
LLP; Harris Associates L.P.; BlackRockInc; Allan Gray Group; Harris Associates Investment
Trust. They hold around 49.9% of the total share of SKY TV (Myllylahti, 2017). CEO John
Fellet is the largest individual shareholder. Some of the largest shareholders of the company
are HSBC Nominees Ltd (48.2%); JPMorghan Chase Bank NA NZ Branch (9.24%); Citibank
Nominees Ltd (9.03%); HSBC Custody Nominees Ltd (7.95%) and many more (Annual
Report, 2018).
Ngai Tahu Holdings Ltd.
Ngai Tahu is a Maori Business Entity which is community owned. Te Rumania o
Ngai Tahu or the Ngai Tahu Charitable Trust is the only trustee operates and own Ngai Tahu
Holdings Corporation Ltd and their subsidiaries. The members of the Maori community will
select and elect the new directors in the annual general meeting. They can also be removed by
consensus (Ngai Tahu, 2018).Around 10% of the Ngai Tahu share is being held by Ngai

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Tahutanga, whereas TeAoTuroa held 10%; Oranga held 5%; WhaiRawa held 13%;
Matauranga held 11%; PapatipuRunanga 23%; TeWhakaariki held 6% and finally there are
18% tribal representation in NagiTahu distribution (Ngai Tahu Annual Report, 2018).
Models of Corporate Governance:
The process by which companies is run is known as corporate governance (Carroll,
2012). There are different models of such governance that are available all over the world.
There is ambiguity and difference of opinions about which particular model is best; however
each model has its own set of advantages and disadvantages (Carroll, 2012). Models are
developed and implemented following the rules, regulations and laws of the countries from
where they originate. Mainly they are Anglo-US model, German model and Japanese model.
Anglo-US Model:
The Anglo-US model works based on a system of individual or institutional
shareholders who are mainly the outsiders of the corporation (Passador, 2016). The other key
players of the corporate governance are triangle management and board of directors. The
board of directors comprises of insiders (the executive directors) and the outsiders (non-
executive director or the independent director). Traditionally one person occupies the chair of
both the CEO and the chairperson of the board of directors. This model depends and works
on proper communication between the three triangles of the corporate governance but the
important decisions are usually taken by shareholders. The managers are appointed by the
directors who are appointed by the shareholders (Passador, 2016). The board has limited
ownership stakes in the company. The individual shareholders and institutional shareholders
more or less have equal control on the ownership. Professional managers having negligible
ownership usually run the company. There is a clear separation of management and
ownership.

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German Model:
German model is a two-tier model, as it comprises of supervisory board and the
management board. The two boards are very distinct. Hence, no one can serve both the
boards simultaneously. The size of the supervisory board is determined by law and cannot be
changed by the shareholders (Passador, 2016). The key players here are the banks and
corporate shareholders. There is restriction on the voting rights; hence, voting rights of the
shareholders are limited to a certain percentage of the company’s total share capital.
Management board is responsible for management of the company, supervisory board for
appointing the management board and the shareholders along with employees mainly appoint
members to the supervisory board. In this model, the majority shareholders are banks and
financial institutions (Passador, 2016).
Japanese model:
The Japanese model incorporates a high level of ownership by banks and affiliated
companies. This type of model reflects the cultural relationships in the Japanese keiretsu
network where boards are large and ritualistic. In this model, the insiders account for the
board of directors (Spiller et al., 2011). Insiders and their affiliates are the main shareholders
of this type. In this category, the four key players are the main bank (major insider
shareholders), affiliated company or keiretsu (a major inside shareholder), management and
the government. Non-affiliated share holders have negligible or no contribution in Japanese
governance. Hence, there lie only few independent directors (Spiller et al., 2011).
In this regard, it can be said that the Sky Network Television ltd. follows the Anglo-
US model, Fonterra followed German Two-Tier model and Ngai Tahu Holdings follow
Japanese model of corporate governance.

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Anglo-US model of Sky Network Television Ltd.
One of the notable characteristic of Anglo-European model is that the same person
serves the chair of both Chairman and CEO. Peter John Macourt is the present CEO cum
Chairman of the company (Tricker, 2015). The keys players of the Sky Network are the
management, shareholders and board of directors. The board of directors consists of both
executive and non executive directors. Sky Network Television Ltd. is registered in New
Zealand. Company laws are based on common law of the country. Governance will be based
on principles. Proper Corporate governance codes will be followed. The shareholders usually
take important decisions (Tricker, 2015).
Europe's two-tier model implemented on Fonterra:
Features of this model are that the Company registration is at a country level. Fonterra
is registered in New Zealand but they operate is almost all over the world. Company law is
based upon the rule based on civil law. Governance is implied in law (Victoria Stanciua,
2015). They follow all the regulations and laws related to dairy governance. Fonterra has
followed international accounting standard. The key players of Fonterra are banks and
corporate shareholders. None of the members serves both the boards as it is against the
principle of two-tier system. Fonterra ownership is limited as Fonterra gives importance to
control rather than money and ensures that ownership is limited to the trustworthy members
in the corporation. Fonterra has two types of Directors; they are the Elected Directors and the
Appointed Directors. On the board, Fonterra has around 13 directors, according to Annual
Report 06/07 (Finn, 2014). Nine out of these are elected from shareholder base, which are
called elected Directors (Finn, 2014). The rest are selected by the Board and confirmed by the
shareholders at the annual general meeting, they are called appointed directors.

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Japanese model of corporate governance:
Ngai Tahu Holdings follows the corporate governance model, which is similar to
Japanese model. Following are the characteristics of Japanese model, which are also, be
found in Ngai Tahu (Ngai Tahu Annual Report, 2018). There will be unity throughout the
members of the organization. Lifetime employment and Enterprise unions are available.
Decision-making will happen by consensus of the stakeholders (Buchholtz, 2012). There are
many directors in the board, both internal and outsider directors, majority being the internal
ones. Board of directors consists of only insiders. Outside shareholders have no power.
In the following table, the board structures of three companies have been compared:
Two Tier Model of
Fonterra
SKY TV’s Principle based
model
Japanese Model of Ngai
Tahu
Governance is based on laws
and principles.
Governance is based on
principles
Governance practice is based on
consensus.
Decision is taken by the
chairman and board.
Decision by board. Decision by shareholders by
consensus.
All members of board are
executive members.
Both executive as well as non-
executive directors.
Board of directors in large
number.
Discussion:
In this portion, the legal responsibilities and the social responsibilities of a corporation
are elaborated.

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Legal responsibility of the board:
A company, which follows the core principles of good corporate governance usually,
performs and excels other companies and will be able to attract investors whose contribution
can aid in increasing financial growth of the company (NASCO, 2018). The principles of
core governance are fairness with transparency, accountability and responsibility. Good
governance is a key that supports the integrity and efficacy of the company (Myllylahti,
2017). Poor corporate governance results into difficulties in economy, weak company output
and damages in its reputation (NASCO, 2018). It is the responsibility of the board to be Fair
and Transparent, Accountable and Responsible for the activities of the company. There
should be transparency and impartiality in the treatment of all the stakeholders including
employees, communities and public officials. The fairer the company behaves, the more it
will be popular in the market. One of the principles of good governance is transparency. The
stakeholders must be aware of the company’s business, its future plans and any risks it can
incur. Company should clearly mention the roles and duties of the board and management to
provide the shareholders with a height of accountability. Transparency allows the
stakeholders to have faith and confidence in the company. Corporate Accountability refers to
the responsibility and duty to provide an explanation and cause for any act and conduct of the
company. The board must be clear to its members and outsiders through its report and
meetings and journals. It must present a balance assessment of the future aspect and present
position of the company. It should also make outsiders as well as members aware of the
future risks it is willing to incur. The board must communicate with the stakeholders and
arrange for risk management. Accountability and responsibility are complementary to each
other. The board is made accountable to the shareholders for any man-handling of
responsibilities.

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The report critically evaluates the legal responsibilities with the following in a brief
manner. The topics that have been evaluated with legal responsibilities are Compliance,
Ethical Behavior and Social responsibility.
Compliance
The companies are having increasing Compliance need with a sharp duty to obey the
laws and regulations that go to the top of the organization. For a company, its boards are held
liable for any non-compliance of the legal responsibilities. The board has the duty to assure
that all measures are taken to identify risks and allowing the implementation of processes to
manage those. The board must follow a written code of business conducts and ethics. It must
ensure that all the operations are complied with the laws, rules and regulation. Compliance
must be with respect of ethical behavior and sustainability.
The company must review the ethical behavior of the board so that it does not violate
or infringe any legal responsibility. The board must follow the five codes of ethics, which are
integrity, object oriented, confidentiality, professional competence, and due care and
professional behavior. Ethical behavior means working in the way that is helpful to the
society and individuals. It is for the good of the society and individuals. This type of behavior
is not codified. Hence, the company has to prepare its own set of rules that will be followed.
Sustainability means to the ability to remain maintained at a certain level. The board must
find a unique way to link sustainability with corporate objective and strategy. Once the
sustainability is achieved, the company can sustain and make itself strong in the market. The
shareholders will gather more faith on the board and they will be ready to invest more
revenues. The board of directors is responsible for the observation, analysis, governance and
management of the corporate legal responsibilities. The role of directors with regard to legal
responsibilities includes approval of strategies, plan, policies, and budget of CSR;

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formulation of social responsibility activities and its implementation; monitoring CSR
activity implementation and resources; approval of CSR risk management (A Carroll, 2012)
According to the Companies Act of 1993 directors are entrusted with the following
legal duties, which include duty to take care in organizational decision-making and
organizational planning and duty of loyalty so that the members of the board should not
misuse the information or power, which they are getting. There must be duty of obedience
such that the directors of the board should show the same kind of interest and dedication to
the nonprofit organization's mission as well like how they are showing it to the profit
mission. Other duties include the duty to manage the financial management and statutory
compliance of the company. The directors must use their powers of specific purpose. It is
necessary that the board of directors must perform their duties and responsibilities
religiously, in good faith for the betterment of the company. The directors must ensure that
all the works and operations of the company must comply with the existing laws and
regulations of the country and government. Along with the Companies Act of 1993, the
companies are also associated with the ASX Corporate Governance Principles and
Recommendations 2007.
The three above-mentioned companies are also doing compliance with the legal
responsibilities that are elaborated below. Fonterra is complying with Dairy Industry
Restructuring Act 2001 (DIRA). They are following the principles of Dairy Industry
Restructuring (Raw Milk) Regulations 2012 and based on it they are filing that 795 million
liters of Milk they are generating each season. According to 150H of DIRA 2001, price
manual of Fonterra is being reviewed annually by Commerce Commission (Fonterra,
2018).According to these regulations, Fonterra need to disclose some of the details like total
amount of milk supplied by farmers, total cost of milk, Kilos of solid milk supplied,
additional cost of organic milk, additional cost of winter milk.

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Fair Trading Act 1986, Health and Safety at Work Act 2015 and many other being
followed. It is also registered under the cooperative companies act. It has complied with the
NZX listing rules by adding the board charter in its website. According to New Zealand
constitution, the shareholders of Fonterra have an option to choose an independent committee
consisting of six farmer shareholders who can make recommendations regarding
remunerations.
The Fonterra board has established a committee called Audit & Finance Committee
to help the board to perform its corporate governance responsibilities (Maloney, 2018). The
responsibilities of the committee are reviewing the working of Fonterra’s financial
management and internal control, supervising the financial practices and processes used by
the management, analyzing the procedure to prepare documents, performing external audit
report and internal audit report as well. The audit and finance committee also supervise that
the internal audit function is sufficiently supported and has required standing in Fonterra
(Myllylahti, 2017). It must maintain free communication between the board, internal audit,
external audit and management.
Ngai Tahu comply with the provisions of Charitable Trust Amendment Act 2010,
Companies Amendment Act 2013 and Employment Relations Act 2000. SKY TV Network
must follow Unsolicited Electronic Messages Act 2007; Consumer Guarantees Act 1993
and the Fair Trading Act 1986. They should also comply with the regulations under
Broadcasting Act 1989; Financial Reporting Act 2013; Privacy Act 1993.It should be noted
that these companies are not following some provisions of minimum wage rates policies,
parental leave payments, Visas for migrant workers, management and safe handling of
hazardous substances and other relevant aspects. In order to deal with the risk of international
market, Fonterra need to ensure access to cost control and finance (Ngai Tahu, 2018).

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Ethical Behavior
According to the Principles and guidelines of Corporate Governance in New
Zealand following are the guidelines for the Board of Directors with regard to Ethical
Behavior (Governance New Zealand, 2018). The board should act honestly, should set the
higher professional and personal integrity; Dealing conflicts of interest; not taking part in
illegal activity. Compliance with the regulations or laws, which also include the restriction on
share dealings. It also includes reporting all kind of unethical behavior of any stakeholder.
Processes for recording and evaluating compliance must be present. Communication
regarding code of ethics to the employees (Financial Markets Authority, 2018) must be there.
The directors must not have personal interest that will collide with the overall interest of the
shares of the company.
Fonterra's ethical behavior includes some of the social or voluntariness dimensions
like Fonterra Milk for Schools; Kickstart Breakfast; Fonterra Grassroots Fund; Fonterra Child
Fund Partnership at South East Asia; Farmer Development Program at Sri Lanka (Hart,
2015). They also accommodate the Clean-Green policy in their strategic business decisions.
They have invested on R&D to develop specialize milk which will help in combating high
diabetes and cholesterol. Fonterra have provided nutrient management techniques to their
farmers, fencing of waterways, which provide irrigation. Fonterra even aimed at achieving
net 0 manufacturing emission by 2050 (Fonterra, 2017). It must follow its
Code of Business Conduct and Policies laid down in its official website along with
following its own Ethical behaviors policy and Environmental policy, which acts as un-
statutory legislation for the company.
In case of SKY Network ,the responsibility of the directors with regard to code of
ethics is that, they have to support and adhere to the ethics policy; managing the complaints

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regarding the unacceptable behavior; approving and reviewing the amendments to the Code
of ethics if any (SKY TV, 2018). SKY TV have organized fund raising events for the social
causes. Many times, they have conducted the charity events as charity rugby matches. These
funds were donated to NGO, which deals with victims of various diseases (SKY TV, 2018).
The Sky TV Ltd follows certain community guidelines so that people feel safe and delighted
while watching their programs (SKY Network, 2018).. They have right to analyze and
moderate the contents of their program. They usually remove the content, which they found
to be obscene, vulgar or abusive to any particular cast or community. Similarly, comments
indicating personal attacks, having offensive language, or causing breach of any code of
conduct or spam contents are removed. People doing any violation of any community
guidelines are strictly dealt with and such type of posts are totally barred. Sky TV LTD. has
made $7.4m contributions in the community, which included statutory Trust contributions
and sponsorships. It had also developed a new engagement policy for the stakeholders.
However, there are some limitations that are needed to be checked. Further evaluation of the
social impact must be made (SKY Network, 2018). The public perception has to be increased
as a responsible citizen to protect and develop the environment. The Sky Television Ltd has
completed three years of baseline environmental footprint data. Food waste composting has
been lately introduced which reduced waste by 10%. Fully degradable and compostable
coffee cups and lids were used in their offices, canteens and cafeteria. It align its governance
goals with the UN Sustainable Development Goals.
Environment Protection Scheme of Ngai Tahut gives special preference to the
environmental protection (Ngai Tahu, 2018).. They have undertaken special programs like
giving helping hand to precious bird on Southland's Bluff Hill; launching of Whakap-Ora
healthy harbor which aims at restoration of ecological and cultural health of the region;
Freshwater Improvement Fund which supports Waituna and Ahuriri people (Ngai Tahu,

15CORPORATE GOVERNANCE
2018).. They have formulated special policy advisory for the climate change; preservation of
rare species Kanakana. Ngai Tahu has won the Clean Ocean Advocate Award. They have the
natural environment protection fund by name Mahinga Kai Enhancement Fund (Ngai Tahu,
2018).
Treaty of Waitangi:
The treaty of Waitangi is like the Bible that controls the corporate governance of the
board. It laid down several principles statutorily recognised by the Waitangi Day Act 1960
that allows the board to work smoothly and efficiently. It is signed to protect the rights of the
Maori to keep their land, forests, fisheries and treasures while transferring them to the control
of British. The foundation of the present day New Zealand was laid when the heads of Maori
organizations signed an agreement with the British crown in May 1840, which is famously
known as Treaty of Waitangi and now recognized by the New Zealand Day Act 1973. The
treaty was signed so that the British people and the local Maori people could reside
peacefully in New Zealand by following a common laws and agreements of the land
(Financial Market Authority, 2018).
Three Principles (3P’s) of the Treaty of Waitangi are protection, participation and
partnership that are discussed below with light of duties of directors of the company, which
has been recognised under the Treaty of Waitangi Act 1975.
Partnership means working together with the Maori communities harmoniously to
develop strategy for Maori education.it means engaging with Maori community, equity for
Maori and sharing of power.
Here, principle of participation needs to be considered. The board members need to
take active participation and consider the responsibilities along with other members of the
company. The Maori values or Treaty values like honesty, confidentiality, impartiality and

16CORPORATE GOVERNANCE
corporate opportunities need to be considered. They are to be protected and preserved
(Financial Market Authority, 2018)..
Treaty of Waitangi also gives importance to the good faith and guidelines of the
partnership concept to the directors (NASCO, 2018). They should be true, loyal and bound to
work for the ultimate benefit of the company as well the community.
Protection means protecting the Maori knowledge, interests, values and other cultures.
It includes valuing and validating local knowledge, learning tikanga at school level.
Participation means working together to strengthen home school relations, aspirations
of Maori culture to be reflected in school planning and the school environment must reflect
the bi-culture structure of Aotearoa.
The corporate governance of all these companies must involve the three principles of
Treaty of Waitangi in their business operations. The principle of partnership, protection and
participation need to be incorporated in the business operations (Financial Market Authority,
2018).. Board of directors of Fonterra, Sky Network TV and Ngai Tahu must involve all the
stakeholders specially the Maori people in the business decision making. Their concerns need
to be considered and their inputs should find place in the strategic decision-making. The
inputs of Maoris should be given respect, empathy should be shown towards Iwi community
in the corporate governance. Board of directors should encourage all the stakeholders to take
part in the policy making by conducting genuine discussion and consultation (Financial
Market Authority, 2018)..
Companies must work together with all the internal and external stakeholders.
Company should try to engage the business with Maori business communities and promote
cultural diversity at the workplace. Company must also ensure that utmost values and honor
have been given to the Maori values and Maori spirituality (Spiller et al., 2011).

17CORPORATE GOVERNANCE
Social Responsibility
Social Responsibilities are those duties that are desired to achieve the values of the
society. A law-abiding company is socially responsible as well. Every business has a duty to
work within the outline created by various legally aided social norms at every level of
business. These duties are created for the betterment of the society and the environment
(CSR, 2018).
Ecological sustainability received greater importance in the recent past. The
restoration and protection of environment is very important for safeguarding the future
generations. Board of directors should work collaboratively and collectively to overcome all
the environmental challenges (Kocmanova et al., 2011).
In case of Fonterra, the social compliance with regard to environment is listed below.
Board must be supporting stronger and healthier environmental approaches with the help of
integrated approaches (Fonterra, 2018). It should also include setting the aspirations, targets
and objectives, which will drive the environmental performance (Fonterra, 2018). They
should also support the farmers in the process of implementing the EMS-environmental
management system (Jacobo-Hernandez, 2016). They should also think about increasing the
green balance by involving broader step grass farming. Cattles should be allowed to graze on
fixed areas for this. The New Zealand Companies Act 1993 along with the ASX Corporate
Governance Principles and Recommendations 2007 would guide it.
Sky Network is also investing in the research and development of sustainable
approach. They want to improve the usage of technology. They have dedicated TV channels,
which run shows wherein experts share their thoughts regarding the environmental protection
and ecological sustainability. The channel runs program, which spread the awareness among
the masses .They also give training regarding the sustainable use of environment.

18CORPORATE GOVERNANCE
While Ngai Tahu is focusing on the Environmental issues, Fonterra too have special
considerations for the ecological behaviors (Ngai Tahu, 2018). SKY TV is not directly or
physically involved, but they are having TV program in which they highlight the ecological
importance. These are the ethical considerations made by the board of directors with regard
of social expectation (Passador, 2016).
In case of SKY network, board need to provide all kind of information to the
shareholders and all the stakeholders. Information regarding the financial as well as non-
financial reporting in clear and timely manner need to be disclosed (Fern Fort University,
2018). The audit and risk committee will oversee the preparation of company's financial
statement. The financial performance of the SKY network is having ups and down. This year
they have recorded the net loss of $240 Million while there was a profit of $116 million for
the year 2017 (Annual Report, 2018).
Yearly Dividend Payout Ratio-SKY TV Network
(By calendar year in
cents per share)
2018 2017 2016 2015 2014
Interim dividend
(paid in March)
7.5 15 15 15 14
Final dividend (paid
in September)
7.5 12.5 15 15 15
Total ordinary
dividend
15 27.5 30 30 29
Share value of SKY Network TV:
2015 6.04

19CORPORATE GOVERNANCE
2016 4.59
2017 4.55
2018 2.81
Source: (NZX, 2019).
If we look at the financial performance of Fonterra, we get the following. The return
on capital is 6.3% while normalized earnings per share is 24%. The free cash flow stands at
$600 million. For the year 2017-18 the net loss after tax was $196 million which is much
lower than the profit of $745 million which was earned last year.
Dividend per share (%)
Year ended 31-Jul-18 31-Jul-17 31-Jul-16 31-Jul-15 31-Jul-14

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Interim
dividend
10 20 10 5 16
Final
dividend
0 20* 15 5 16
Total annual
dividend
10 40 25 10 32
Yearly share price
2015 6.05 NZD
2016 6 NZD
2017 6 NZD
2018 6.39 NZD

21CORPORATE GOVERNANCE
Recommendations:
SKY Network TV Ltd, is having well defined corporate governance structure. But
there are some flaws which need to addressed and resolve at the earliest. Some of the
recommendations for SKY TV, which can help in improving corporate governance, includes,
giving extra attentions to the risks and more attention towards minute details (Governance
New Zealand, 2018). Board of director’s compositions should have more diversity. SKY TV
should learn from peers and should incorporate the good practices followed by their
competitors. It is also recommended that there is a clear transparency in the business
operations (Hart, 2015).

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Ngai Tahu Holdings can further improve their practices of corporate governance if
they adopt and promote the diversity in their board and business practices (FRITZ, 2018).
They should appoint only the competent members in their board; they should involve all the
tribes and communities in their business operations. The company should encourage all the
board members to give path-breaking suggestions and have healthy discussion. They should
held regular interactive meetings with all the various stakeholders. The role of the board in
the governance and leadership of the company or the department must be clear (FRITZ,
2018).
Fonterra should never forget about their origin they should always give foremost
priority to the farmers (Fonterra, 2018). It is advised and recommended to Fonterra to follow
the feedbacks, inputs and suggestions given by the farmer since, we have seen here that
farmers are their main owners or stakeholders. Board of directors should have thorough
knowledge and experience of farming and dairy too. Corporate knowledge of the directors
will not be enough for the company to progress (Fonterra, 2018). It is also recommended to
monitor the overall organizational performance, maintenance and building of the effective
governance infrastructure. Transparency is the main element in the corporate governance. It
is recommended that Fonterra must share all the details regarding the corporate rules to the
general public. They can provide the details on their company website (Governance New
Zealand, 2018).
Conclusion
The complexities of sustainable development call for improvement in the corporate
governance practice. A company, which is following or respecting all the legal and social
responsibilities, will have long-term sustainability or the long life. Good corporate
governance will always help in the improvement of financial performance of the firm.

23CORPORATE GOVERNANCE
Corporate governance will clearly define the critical role, which the board plays with regard
to social, ethical and legal responsibilities in the context of legislative compliance, treaty of
Waitangi, ethical behavior, ecological sustainability, financial sustainability etc. A good
corporate governance model will help in enhancing the prosperity.
The principles and practices of the good governance will also help the board of
directors in increasing the interest of the board in the functioning. Thus, they need to follow
the principles and guidelines laid down by the Financial Market Agency of New Zealand with
regard to Corporate Governance.

24CORPORATE GOVERNANCE
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