Notice of 2018 Annual Meeting of Shareholders

Dear Shareholder,
As an important part of our Synlait investor group, we hope you can
attend our upcoming Annual Meeting. The 2018 Annual Meeting of
Shareholders of Synlait Milk Limited will be held on Wednesday
28 November 2018 from 1:00pm at Tait Technology Centre,
245 Wooldridge Road, Christchurch 8051, New Zealand.
At our Annual Meeting, we will recap our results and our announced
plans for 2019.
We look forward to seeing you on 28 November. If you cannot make
it please remember to complete and submit the enclosed Proxy Form
so that it reaches our share registrar, Computershare Investor Services
Limited, by 1:00pm on 26 November.
For those shareholders who are attending the Annual Meeting in
person, please bring the enclosed Proxy Form with you to assist with
your registration.
NOTICE OF ANNUAL
MEETING OF
SHAREHOLDERS
2018

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Synlait Milk Notice of Annual Meeting of Shareholders 2018
AGENDA
1:00PM - ANNUAL MEETING
COMMENCES
1. WELCOME
2. CHAIRMAN’S ADDRESS
3. CHIEF EXECUTIVE
OFFICER’S ADDRESS
4. CHIEF FINANCIAL
OFFICER’S REVIEW
5. OUTLOOK
6. FORMAL RESOLUTIONS
(please see the Explanatory Notes at the
end of this Notice)
(i) Auditor’s Remuneration
RESOLUTION 1:
To consider and, if thought fit, pass the
following as an ordinary resolution:
“That the Board be authorised to determine
the auditor’s fees and expenses for the

2019 financial year.”
(ii) Re-election of Director
RESOLUTION 2:
To consider and, if thought fit, pass the
following as an ordinary resolution:
“That Graeme Milne be re-elected as a
Director.”
(iii) Directors’ Remuneration
RESOLUTION 3:
To consider and, if thought fit, pass the
following as an ordinary resolution:
“That the annual fee for each Director be
$85,000, except for the annual fees of each
of the two Committee Chairs, which will
be $97,000 and the Chairman of the Board,
which will be $169,000. All these increases
apply from 1 April 2019.”
(iv) Constitution Amendment
RESOLUTION 4:
To consider and, if thought fit, pass the
following as an ordinary resolution:
“That Synlait Milk Limited’s Constitution be
amended, with effect from the close of the
Annual Meeting, as set out in Appendix 1 to
the Notice of the Annual Meeting.”
(v) John Penno’s Board Appointment
RESOLUTION 5:
To consider and, if thought fit, pass the
following as an ordinary resolution:
“That John Penno be re-elected as a
Director, and, if Resolution 4 is passed,
that John Penno is elected as the Board
Appointed Director.”
7. ANY OTHER BUSINESS
To consider any other business that may be
properly brought before the meeting.
3:00PM - ANNUAL MEETING
CONCLUDES
Refreshments served.
Our Annual Meeting agenda is as follows:

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Synlait Milk Notice of Annual Meeting of Shareholders 2018
ENTITLEMENT TO VOTE
The persons who will be entitled to
vote on the resolutions at this Annual
Meeting are those persons who will be the
shareholders of the company at 5:00pm

on 26 November 2018.
PROXIES
A Proxy Form is included with this Notice.
Any of our shareholders who are entitled to
attend and vote at the Annual Meeting, may
appoint a proxy to attend the meeting and
vote on their behalf. A proxy does not have
to be a fellow shareholder, and you can
nominate the Chairman (or any of our other
Directors) as your proxy if you wish.
The Chairman and the Directors intend to
vote any discretionary proxies in favour of
all resolutions, to the extent permitted by
the NZX Listing Rules, ASX Listing Rules,
and the company’s constitution.
To be valid, a completed Proxy Form must
be sent to Computershare Investor Services
Limited (Private Bag 92119, Auckland
1142, New Zealand). You can also appoint
your proxy online at
www.investorvote.
co.nz
(note you will need your CSN/
Shareholder Number and Postcode). Please
see the Proxy Form for further detail.
In all cases your completed Proxy Form
must be received no later than 1:00pm on
Monday 26 November 2018. Any Proxy Form
received after this time will not be valid.
OUR PROCEDURAL NOTES
RESOLUTION REQUIREMENTS
An ordinary resolution is a resolution
approved by a simple majority of votes of
shareholders who are entitled to vote on
the resolution and who exercise their right
to vote.
A special resolution means a resolution
approved by a majority of 75% or more of
the votes of those shareholders entitled to
vote on the resolution and who exercise
their right to vote.
ANY DETAILED QUESTIONS
FOR THE DIRECTORS OR OUR
AUDITORS
To assist us in providing a proper response
to any detailed questions you may want to
raise at the Annual Meeting, please forward
questions to us in advance of the meeting.
Questions should be sent via email to
investors@synlait.com no later than 5pm
on Friday 23 November 2018.
The Chairman will then ensure that any
questions or comments submitted will
be addressed in the course of the Annual
Meeting.
Please note that our Auditors (Deloitte) will
be at the Annual Meeting to answer any
specific queries you may have of them.
PRESENTATION MATERIALS
If you are not able to make it to the Annual
Meeting, copies of any materials presented
at the meeting by our Chairman, Chief
Executive Officer, and our Chief Financial
Officer will be available on our website
(
www.synlait.com) and on the NZX
website (
www.nzx.com) and the ASX
website (
www.asx.com.au) shortly before
the Annual Meeting commences.
By order of the Board
Graeme Milne

Chairman
OUR BOARD OF DIRECTORS
Sihang (Edward) YangBill Roest
Hon. Ruth Richardson
Min Ben
Graeme MilneJohn Penno
Sam Knowles
Qikai (Albert) Lu

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Synlait Milk Notice of Annual Meeting of Shareholders 2018
EXPLANATORY NOTE 1
(AUDITOR’S REMUNERATION –
RESOLUTION 1)
Deloitte are our existing auditors and
are automatically reappointed at the
Annual Meeting under section 207T of
the Companies Act 1993. The proposed
resolution is to authorise the Board to fix
the fees and expenses of the auditor for the
coming financial year.
EXPLANATORY NOTE 2
(RE-ELECTION OF DIRECTOR –
RESOLUTION 2)
Under clause 5 of Schedule 1 to our
Constitution, one-third of the Independent
Directors (being those who have been
longest in office) must retire from office
at the Annual Meeting each year, but are
able to be re-elected. Accordingly, Graeme
Milne retires from office, and, being
eligible, offers himself for re-election. The
Board considers that Graeme Milne is
an Independent Director under the NZX
Listing Rules.
GRAEME MILNE
Graeme joined Synlait as a Director in
2006. With extensive experience, his
career in the dairy industry has seen him
working in New Zealand, Australia and
Europe. He is the Chairman of Synlait Milk
Limited and Synlait Milk Finance Limited.
Graeme was appointed CEO of Bay Milk
Products in 1992 and has held several
leadership roles since then.
OUR EXPLANATORY NOTES
This included CEO of the New Zealand
Dairy Group, prior to the formation of
Fonterra, and interim CEO of Richmond
Limited and Bonlac Limited in Australia.
Graeme holds several other governance
roles with a range of organisations. He is
the Chairman of PF Olsen Ltd, Terracare
Fertilisers Ltd, and Nyriad Ltd and chairs
advisory boards for Pro-Form Ltd and
Rimanui Farms Ltd. He is also a Director
of Farm Right Ltd and Alliance Group
Ltd and serves on the council of Waikato
University.
The Board and Management of Synlait
Milk Limited support his re-election by
the shareholders.
EXPLANATORY NOTE 3
(DIRECTORS’ REMUNERATION –
RESOLUTION 3)
Director fees in New Zealand are usually
determined on a combination of financial
size of the company, international
dimension to the business, industry
and ownership, performance of the
organisation and performance of the
Board itself.
Our Director remuneration policy is not to
set fees at the top-end of recommended fee
ranges. The policy is to set Director fees at
a mid-range point, relative to the market.
Graeme Milne
Director (Independent)
We engaged EY to conduct a
benchmarking report to verify our
current Director fees against the market.
This report looked at a number of peer
companies in New Zealand.
Overall, taking into account all the
relevant factors, including our business
performance, growing complexity of the
business, increased regulatory risk and
obligations, and ongoing governance
requirements, the Board considered EY’s
recommendations and agreed to adopt the
recommended increase to the Directors’
fees, as follows:
– Increase the Directors’ fees from $80,000

to $85,000.
– Increase the Chairman’s fee from

$150,000 to $169,000.
– No change to the two Committee Chairs’

fees, which remain $12,000 and are paid
in addition to Directors’ fees.
The total governance pool (based on one
Chair and seven other Directors, including
two Committee Chairs) is recommended
to move from $654,000 to $788,000 (a
20.5% increase).
The increase from six to seven Directors
is to accommodate John Penno being
appointed as a “Board Appointed
Director”, if Resolutions 4 and 5 are
passed. As a Board Appointed Director
John will no longer be an employee of
the company and would be eligible for
Director’s fees. If Resolution 4 is not
passed, John will not receive Directors
fees, but will continue to receive an
employee salary.

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Synlait Milk Notice of Annual Meeting of Shareholders 2018
OUR EXPLANATORY NOTES [CONTINUED]
All increases will apply, if approved, from
1 April 2019.
A summary of EY’s report has been posted
on NZX and ASX with this notice of
meeting as well as on our website:

https://www.synlait.com.
The Directors and their Associated
Persons are disqualified from voting on
Resolution 3, including any discretionary
proxies, as per NZX Listing Rule 9.3.1
EXPLANATORY NOTE 4
(CONSTITUTION AMENDMENT
RESOLUTION 4)
On listing, the company’s constitution
(Current Constitution) included a
number of non-standard governance
arrangements which applied for so long
as Bright Dairy held at least 37% of the
shares in the company. NZX granted a
number of waivers to the company to
permit these governance arrangements
(IPO Waivers).
The effect of these provisions was to allow
Bright Dairy to continue to consolidate
the company, following its listing into its
accounts for financial reporting purposes.
Bright Dairy agreed to the company’s
IPO on the basis of these non standard
governance provisions.
One of the non-standard governance
provisions related to the appointment
and removal of the Managing Director.
Under the Current Constitution, the
Board of the company has the right to
appoint a Managing Director. The Bright
Dairy Directors on the Board have 4
of the 7 votes on the Board regarding
the appointment and removal of the
Managing Director. Accordingly, Bright
Dairy in practice has the ability to control
the appointment and removal of the
Managing Director.
The position of Managing Director has been
filled by John Penno, one of the company’s
co-founders.
Since stepping down as the company’s
CEO, John has continued to serve on
the Board but is required to remain an
employee of the company under the
Current Constitution.
To address this, the company is proposing
to amend the Current Constitution, so that
John can cease to be an employee but
remain on the Board.
This means that it will be optional, and
no longer mandatory, for the Board to
have an executive Director. If approved
by shareholders, the amendment allows
the Board to appoint either a Managing
Director or a Board Appointed Director, but
not both.
This change will also allow Bright Dairy to
continue to control the appointment of the
“Board Appointed Director” and continue
to consolidate the company for financial
reporting purposes while its shareholding
remains at least at 37% of the shares in
the company.
The Board Appointed Director will
otherwise be subject to the same
provisions that apply to a Managing
Director, including that he or she would
not be subject to rotation and would have
a term of appointment not exceeding
five years, (but the Board intends to
appoint John for three years, similar to the
Independent Directors).
The Board believes that it is in the
company’s best interests for John to
continue as a Director so that the company
may benefit from his experience and
considerable skills including strategic
ability and for the constitution to accurately
reflect his role. This would also recognise
John’s contribution to the company and its
success over almost 20 years.
If Resolution 4 is not passed, then John will
remain on the Board (subject to Resolution
5 being passed) but, as noted above, he
will be required to remain an employee
to meet the requirements of the Current
Constitution.
As the role of the Board Appointed Director
is not subject to rotation, the company
was required to apply to NZX for approval
to include the special office of Board
Appointed Director under Listing Rule
3.3.14.
Further, the company also applied to NZX
to make consequential updates to the IPO
Waivers to reflect the inclusion of the office
of “Board Appointed Director”.
The amendments proposed to be made
to the Current Constitution have been
approved by NZX under NZX Listing Rules
6.1.1, 6.1.2(c) and 3.3.14. NZX has also
agreed to vary the IPO Waivers to reflect the
position of the “Board Appointed Director”,
subject to the shareholders approving
Resolution 4.
A copy of the Current Constitution, a clean
copy of the amended constitution (should
Resolution 4 be passed), a marked up
copy showing all changes to the Current
Constitution and the IPO waivers may
be reviewed on the company’s website:
https://www.synlait.com/investors/
corporategovernance/.
A copy of the NZX Listing Rules can be
found on the NZX’s website:

https://www.nzx.com/.
The actual proposed changes to the
constitution are set out in Appendix 1.

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Synlait Milk Notice of Annual Meeting of Shareholders 2018
OUR EXPLANATORY NOTES [CONTINUED]
EXPLANATORY NOTE 5
(JOHN PENNO’S BOARD
APPOINTMENT - RESOLUTION 5)
The resolution to appoint John is a two part
resolution. It deals with the ratification of
his re-appointment to the Board effective
earlier this year, and elects him as “Board
Appointed Director”going forward, if
Resolution 4 is passed.
The Board and Management of Synlait Milk
Limited support both John’s reelection
and his appointment as Board Appointed
Director.
The Board initially appointed John as its
Managing Director on 21 June 2013 for a
term of five years, which expired on

21 June 2018.
Under Listing Rule 3.3.9, when a term of
appointment for a Director that is also an
employee expires, the Director may be
reappointed by the Board.
As John continues to serve on the Board
and remains an employee of the company,
he must retire and offer himself for

re-election at this Annual Meeting.
However, if Resolution 4 is passed and
the Current Constitution is amended, the
Board intends to appoint John Penno as
a Board Appointed Director for a term of
three years, starting on 28 November 2018.
The three year term was chosen because
it is similar to the term of independent
Directors of the company.
Even though John is being re-elected at
this Annual Meeting as noted above, his
appointment as Board Appointed Director
would technically be a new appointment.
Therefore, John would be required to retire
and offer himself for re-election at next
year’s Annual Meeting, unless this election
occurs at this Annual Meeting.
The Board considers that it is appropriate
for the election to occur at this Annual
Meeting as the appointment is related
to the amendments to the Current
Constitution being put to shareholders.
As the Board Appointed Director is not
subject to retirement by rotation during the
three year term, his election at this Annual
Meeting, as opposed to next year’s Annual
Meeting, does not have an impact on the
length of his term of service or otherwise on
his role.
As at the date of this notice of meeting,
the Board does not consider that John is
an Independent Director under the NZX
Listing Rules.
If Resolution 4 is not passed and the
Current Constitution is not amended,
John will continue to serve on the Board
(assuming Resolution 5 is passed), but
will also be an employee to meet the
requirements of the Current Constitution.
JOHN PENNO
John co-founded the Synlait Group in 2000
and has been a full-time executive for the
Synlait Group since 2002. After an initial
period of holding the role of executive Chair,
he took up the role of CEO of the group
in 2006. He stood down as CEO of Synlait
Milk in August 2018 and now looks forward
to contributing to the governance of the
company as a Board Appointed Director, if
the Current Constitution is amended.
After completing an Agricultural Science
degree, John commenced his career in the
dairy industry as a consulting officer for the
New Zealand Dairy Board before joining
Dexcel as a research scientist where he
completed a PhD in animal science. As
a scientist and research program leader,
he worked to enable New Zealand dairy
farmers to increase productivity and profit.
In 2009, John received an emerging
leader’s award from the Sir Peter Blake
Trust and the Excellence in Leadership
award at the 2015 New Zealand
International Business Awards.
John remains a shareholder in Synlait Milk
owning 2.85% of the shares on issue.
Through Okuora Holdings, John and his
wife, Maury Leyland Penno, are now active
investors in early stage growth companies
with a focus on sustainable agriculture and
future foods. John is a director of Okuora
Holdings Ltd, and is Chairman of The Pure
Food Company.
John is also serving the Ministers of the
Environment and Primary Industries by
chairing the Fresh Water Leaders Group;
charged with reviewing proposed changes to
policy setting with the objective of protecting
New Zealand waterways and bringing them
back to a swimmable standard.

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Synlait Milk Notice of Annual Meeting of Shareholders 2018
APPENDIX 1 – AMENDMENTS
TO CURRENT CONSTITUTION
22.6 APPOINTMENT BY BOARD
Subject to clause 22.2 and 22.3, the Board may at any time appoint a person to be a Director. A Director so appointed holds office
only until the next annual meeting of the Company but is eligible for re-election at that meeting. For the avoidance of doubt this
appointment right is in addition to the appointment right set out in Schedule 1, Part A, clause 13.
22.9 EXCEPTIONS TO ROTATION
The following Directors shall be exempt from the obligation to retire pursuant to clause 22.8:
(a) Directors appointed by the Board, who are offered for re-election pursuant to clause 22.6;
(b) Directors appointed in accordance with clause 22.5, for so long as the Bright Shareholder is a Bright Group Company and
continues to hold between the Initial Percentage and 50% (inclusive) of the ordinary Shares of the Company; and
(c) any Managing Director appointed under clause 24.1 and any Board Appointed Director appointed under Schedule 1,

Part A, clause 13 .
22.14 VACATION OF OFFICE
A Director ceases to be a Director if he or she
(a) is removed from office by an Ordinary Resolution (other than a Director appointed under clause 22.5, for so long as the Bright
Shareholder continues to hold between the Initial Percentage and 50% (inclusive) of the ordinary shares of the Company and

is a Bright Group Company); or
(b) being a Director appointed under clause 22.5, is removed from office by the Bright Shareholder; or
(c) being a Director appointed under Schedule 1, Part A, clause 13, is removed from office by resolution of the Board; or [...]
23.1 POWER TO APPOINT
Subject to clause 7, Part A of Schedule 1 to this Constitution but without limiting clause 13 15 , Part A of Schedule 1 to this
Constitution, a Director may from time to time by written notice to the Company appoint any person, who is not already a Director or
an Alternate Director and who is approved by a majority of the other Directors, to be that Director’s alternate. No Director may appoint
a deputy or agent except by way of appointment of an Alternate Director under this clause 23. [...]
26.4 EXCEPTION TO VOTING PROHIBITION
Subject to clauses 12 and 14, Part A of Schedule 1 but notwithstanding the provisions of clause 26.3(a), a Director may be included
among the Directors present at the meeting for the purposes of a quorum and vote in respect of a matter in which he or she is
Interested if that matter is one in respect of which, pursuant to an express provision of the Act, Directors are required to sign a
certificate or one which relates to the grant of an indemnity pursuant to section 162 of the Act.
SCHEDULE 1 TO CONSTITUTION
Part A – Director Appointment Rights of the Bright Shareholder while it continues to hold between the Initial Percentage and 50%
(inclusive) of the ordinary Shares of the Company.
From the time the Company is Listed, for so long as the Bright Shareholder continues to hold between the Initial Percentage and 50%
of the ordinary Shares of the Company and is a Bright Group Company, subject to the Initial Percentage being not less than 37% of the
ordinary Shares of the Company at the time the Company is Listed, the following provisions of this Part A of Schedule 1 shall apply:
11. The Board must
may appoint a Managing Director under clause 23.1 24.1, if there is no Board Appointed Director and the
Managing Director must not be a Bright Director. If there are more than three directors appointed otherwise than under paragraph 1,
and one of them is not a Managing Director, those Directors must procure one of their number (as determined by a majority vote of
those Directors unless otherwise agreed among those Directors) to resign so that a Managing Director can be appointed.
The following clauses of the Current Constitution be amended as follows:

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Synlait Milk Notice of Annual Meeting of Shareholders 2018
12. The A Managing Director holding office shall, for the purposes of clause 26.3, be deemed to be Interested in any matter relating
to the removal of the Managing Director from office, any matter relating to the Managing Director’s remuneration, and any matter
relating to the appointment of a new Managing Director or Board Appointed Director (and, notwithstanding clause 26.4, shall not
be included among the Directors present at the meeting for the purposes of a quorum and shall not be entitled to vote on any such
matter). In any matter relating to the appointment of a director as Managing Director, the director to be appointed shall, for the
purposes of clause 26.3, be deemed to be Interested in such matter (and, notwithstanding clause 26.4, shall not be included among
the Directors present at the meeting for the purposes of a quorum and shall not be entitled to vote on any such matter). This clause
shall apply notwithstanding anything in the Listing Rules.
13. If the Board does not appoint a Managing Director, then the Board must appoint one (1) Director to the Board for a period
not exceeding five years and on such terms as the Board thinks fit to be the eighth Director on the Board (Board Appointed
Director) and may at any time remove such Director. The Board Appointed Director may be reappointed upon the expiry of a term
of appointment. Subject to clause 22.9(c) and in addition to the right of the Board to remove a Board Appointed Director, a Board
Appointed Director is subject to the same provisions as regards resignation, removal and disqualification as the other Directors.

The Board Appointed Director is subject to the same provisions as regards remuneration as the other Directors.
14. A Board Appointed Director shall, for the purposes of clause 26.3, be deemed to be Interested in any matter relating to the
removal of the Board Appointed Director from office, and any matter relating to the appointment of a new Board Appointed Director
or Managing Director (and, notwithstanding clause 26.4, shall not be included among the Directors present at the meeting for the
purposes of a quorum and shall not be entitled to vote on any such matter). In any matter relating to the appointment of a director
as Board Appointed Director, the director to be appointed shall, for the purposes of clause 26.3, be deemed to be Interested in such
matter (and, notwithstanding clause 26.4, shall not be included among the Directors present at the meeting for the purposes of a
quorum and shall not be entitled to vote on any such matter). This clause shall apply notwithstanding anything in the Listing Rules.
13.
15. If a Bright Director is unable to attend a meeting of the Board then that Bright Director may by notice in writing to the
chairperson (to be received by the chairperson no later than 24 hours prior to the time scheduled for the meeting to commence),
appoint another Bright Director to exercise that Bright Director’s vote at that meeting. For the avoidance of doubt, the Bright Director
that is entitled to exercise another Bright Director’s vote shall not be deemed to be that other Bright Director’s alternate, deputy or
agent and that other Bright Director shall be deemed not to be present at the meeting for the purpose of determining whether a
quorum is present. Any such appointment shall only apply in respect of the particular meeting to which it relates. This clause shall
apply notwithstanding anything in the Listing Rules.

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Synlait Milk Notice of Annual Meeting of Shareholders 2018
P
Wairakei Road
Tait Technology
Centre
Entrance
Wooldridge Road
Nunweek Park
Hockey Fields
OUR ANNUAL MEETING WILL BE HELD AT:
Tait Technology Centre
245 Wooldridge Road
Harewood

Christchurch 8051
New Zealand
P+ 64 3 943 2237
MEETING VENUE DIRECTIONS
Tait Technology Centre is conveniently
located 2km from Christchurch airport.
Parking will be available onsite. If you
need assistance on the day contact the
Synlait Annual Meeting representative on

03 373 3000.

---

Directors’ Fee Review

Synlait Milk Limited

August 2018

Synlait Milk Limited
August 2018
Non-Executive Director fees benchmarking EY  1
Table of contents
Executive summary ............................................................................................................................................................................. 2
1. Introduction .............................................................................................................................................................................. 3
2 Chair and NED fee overview ........................................................................................................................................................ 7
3 Market fee data ......................................................................................................................................................................... 8
4 Committee fee practice .............................................................................................................................................................. 9
5 Summary and recommendations ............................................................................................................................................... 10

Synlait Milk Limited
August 2018
Non-Executive Director fees benchmarking EY  2
Executive summary
The findings in this section summarise the market positioning for the Synlait Milk Limited (Synlait) Chair and Non-Executive Director (NED) fees against the
market. As requested by Synlait, EY used the updated comparator group agreed in October 2017. Further information regarding the comparator group
used is discussed in Section 1.6.
Table 1: Summary of current fee practices against market
Role
Synlait Fees
($)

Lower Quartile
($)
Median
($)
Upper Quartile
($)
Average
($)

Comparative
Ratio
(Median)
Synlait Positioning
Chair
150,000

155,000 169,000 184,724 168,350

89%

Ranked 6
th
equal
Non-Executive Director (base fee) 80,000

80,000 85,000 90,000 85,584 94% Ranked 7
th

Audit & Risk
Committee
Chair
12,000

10,000* 10,000* 20,000 14,216

120%

Ranked 3
rd

Member
-

7,375 8,750 11,619 10,244

-

-
Remuneration &
Governance
Committee
Chair 12,000

8,500 10,000** 10,000** 12,548

120% Ranked 2
nd

Member
-

*** *** *** ***

-

-
* Approximately 55% (five out of nine) of the comparator group pays a $10,000 base fee for the Audit & Risk Committee Chair, leading to the same lower quartile and median.
** Half (three out of six) of the comparator group pays a $10,000 base fee for the Remuneration & Governance Committee Chair, leading to the same median and upper quartile.
*** Insufficient data from the comparator group to publish an interquartile fee range.

Comparative ratios within 90%-110% of the market median are considered aligned to the market median.
In summary, our findings are as follows
► Chair: current fees are below the median of the comparator group.
► NED: current fees are aligned to the median of the comparator group.
Thank you for the opportunity to assist you on this assignment. Please do not hesitate to contact us if you have any questions.



Una Diver
Partner - People Advisory Services
Ernst & Young Limited

Synlait Milk Limited
August 2018
Non-Executive Director fees benchmarking EY  3
1. Introduction
1.1 Background
Synlait Milk Limited (Synlait) has engaged EY to review the fees paid to
the Board of Directors.
This report provides information on:
► New Zealand market practice
► Market fee data for similar organisations in terms of characteristics,
industry, revenue and assets based on comparator group agreed
with Synlait
► Comparisons between current Director fees and the market data
► Market practice related to committee fees.

1.2 Methodology
In completing this review of Directors’ fees, EY applied the following
methodology:
► The comparator group agreed with Synlait in October 2017
► Sourced information on current fees across the comparator group
organisations
► Compared Synlait’s Directors’ fees against the comparator group
market data
► Analysed the relativity of current fees to the market.




1.3 Annual fee movement data
Table 5 below shows annual fee movements for the Chair and NEDs from
EY’s Directors’ Fees Report 2018.
Table 5: Annual fee movement
Role Median movement (%)
Non-Executive Chair 2.7%
Non-Executive Director 2.3%
The movements above are affected by two key factors:
• Some organisations do not review fees annually, so the changes to
fees can be affected by the changes in the data sample. For
example, NEDs made up more than half of the sample (60%).
• The data above reflects a whole sample movement. As a result,
changes in the sample composition can impact fee movement
data.

1.4 Fee elements analysed
Information set out in this report is based on both disclosed market data
and information from EY’s 2018 Directors’ Fees database for the selected
comparator group. Please note we are unable to disclose information for
privately–held organisations; however, all company information has been
included in our overall analysis.
Base fees
Base fees are typically used to benchmark and develop fee structures as
they differentiate between board and committee fees.

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August 2018
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Actual total fees
Actual total fees are typically used to understand how overall fees
compare against the comparator group.
Table 2: Roles analysed for actual total fees
Fee elements analysed Roles
Base fees Board Chair NEDs
Actual total fees Board Chair NEDs
Audit and Risk Committee Chair Member
Remuneration and Governance Committee Chair Member

1.5 Synlait current fee structure
The current fee structure operated by Synlait is outlined in the Table 3
below. We understand Non-Executive Directors (NEDs) at Synlait do not
receive additional fees as committee members.
Table 3: Synlait’s current fee structure
Roles Base fees
Board Chair 150,000
Non-Executive Director 80,000
Committee Chair 12,000
Committee Member -





1.6 Comparator group
Table 4 sets out revenue and market capitalisation for each organisation
in the comparator group.
Table 4: Comparator group
Company
Market Capitalisation
($m)
Company revenue
($m)*
Zespri Group Limited - 2,448
Alliance Group Limited - 1,533
PGG Wrightson Limited 483 1,113
T&G Global Limited 392 1,106
Synlait Milk Limited 1,970 878**
Tegel Foods Limited 402 615
The A2 Milk Company Limited 7,607 550
Freightways Limited 1,218 545
Sanford Limited 716 477
Delegat Group Limited 946 253

Synlait Milk Limited Rank 5th

*The data in the above table is presented in order of revenues as not all companies are publicly
listed.
** Annualised based on the first half year revenue for 2018.
*** As in 2017, the data is sourced from New Zealand’s Stock Exchange website, dated 3 August
2018.

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1.7 Key considerations
The market data, including base fees and actual total fees, provides
guidance in relation to setting and positioning Synlait’s Chair and NED fee
policies.
In order for the information in this report to be applied effectively, Synlait
may wish to consider the market data in the context of the following:
► The companies included in the comparator group. The typical
approach adopted for setting NED fees is to compare against
organisations broader than just the specific industry as a broad
range of skills and experiences are required to comprise an effective
board of Directors.
► The Company’s revenue and asset position against the relevant
comparator group.
► Time commitment required for NEDs. The higher the time
commitment, the greater the emphasis on positioning fees above
median. Consideration of time commitment should focus on
ongoing time rather than one-off increased loads (e.g. due to a
transaction).
► Complexity of business. Complexity can be measured by factors such
as international footprint (e.g. overseas revenue, assets, etc.) and
regulatory / industry issues. The higher the complexity of the
industry in which the company operates, the greater the emphasis
on positioning fees above median.
► Degree of potential reputational risk. The higher the potential
reputational risk, the greater the emphasis on positioning fees above
median.
► The supply of talent available for the role(s). The greater the scarcity
of talent or specific skill sets, the greater the emphasis on
positioning fees above median.

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August 2018
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2 Chair and NED fee overview
2.1 Overview of fees paid to Chair and NEDs
Table 6 below outlines a breakdown of fees paid to Chairs and NEDs within the selected comparator group.

Table 6: Summary of fees paid to Chairs and NEDs
Company Base fees – Chair ($) Base fees – NEDs ($)*
The a2 Milk Company 120,000 120,809
T&G Global Limited ** 93,000
Tegel Foods Limited 169,000 90,000
Sanford Limited 150,000 85,000
Freightways Limited 160,000 85,000
Zespri Group Limited 199,447 81,447
PGG Wrightson Limited 210,000 80,000
Synlait Milk Limited 150,000 80,000
Alliance Group Limited 170,000 70,000
Delegat Group Limited ** 65,000

Synlait Milk Limited Ranked 6
th
equal Ranked 7
th

* Information is sorted by Base fees – NEDs
** Information is not included in the analysis because incumbents are executive Chairs.

► Synlait’s Chair fees are positioned below the median range of the comparator group.
► Synlait’s NED fees are aligned to the market median of the comparator group.

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August 2018
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3 Market fee data
This section presents market fee data for the Chair and NEDs.
3.1 Chair
Table 7 compares Synlait’s current Chair fee to the organisations in the
comparator group. Of the nine companies, two were excluded from the
analysis as their Chairs are executive Chairs. Compared to 2017, median
base fees for Chairs increased by 12% from 150,000 to 169,000.

Table 7: Base fees – Chair
Market data ($)

Synlait
Lower
Quartile
Median
Upper
Quartile
Average
Sample
size
Base fees ($)
1

150,000 155,000 169,000 184,724 168,350

7

Market
Capitalisation
($m)
1,970 443 716 1,082 1,681
Revenue ($m) 878 548 615 1323 1040

• Synlait’s Chair’s base fees are below the lower quartile of base
fees paid to Chairs in the comparator group.
• Synlait’s market capitalisation is above the 75th percentile
• Synlait’s revenue is above the median




1
Base fees refers to the sum received by each Chair within an organisation excluding Committee fees

3.2 NEDs
Table 8 compares Synlait’s current NED fees to the organisations in the
comparator group. Compared to 2017, median base fees for NEDs
increased by 6% from 80,000 to 85,000.


Table 8: Base fees - NED
Market data ($)

Synlait
Lower
Quartile
Median
Upper
Quartile
Average
Sample
size
Base fees ($)
2

80,000 80,000 85,000 90,000 85,584
9*
Market
Capitalisation
($m)
1,970 443 716 1,082 1,681
Revenue ($m) 878 545 615 1,113 960
*Two organisations are not publicly listed
• Synlait’s NED base fees are aligned to the lower quartile of base
fees paid to incumbents in the comparator group and equate to
94% of median
• Synlait’s market capitalisation is above the 75th percentile
• Synlait’s revenue is above the median



2
Base fees refers to the sum received by each NED within an organisation excluding Committee fees

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4 Committee fee practice
4.1 Audit and Risk Committee Fees

Table 9 below compares Synlait’s Audit and Risk Committee fee policy
against the market data for disclosed fees in the comparator group. All
organisations within the comparator group pay additional fees to NEDs
for chairing this committee.

Table 9: Audit and Financial Risk Committee fee policy market data
*Five organisations in the sample pay a $10,000 base fee to the Audit & Risk Committee Chair
which results in the same lower quartile and median.
• Synlait’s Audit and Risk Committee Chair fee is 120% of the
median.
• Synlait’s market capitalisation is above the 75th percentile
• Synlait’s revenue is above the median
4.2 Remuneration and Governance Committee
Fees
Table 10 below details Remuneration and Governance Committee fee
policy data in comparison to market data for disclosed Remuneration
Committee fees within the comparator group. Of the nine companies, six
organisations disclosed their fees.
Table 10: Remuneration and Governance Committee fee policy market data
Market data ($)

Synlait
25th
percentile Median
75th
percentile Average
Sample
size
Chair policy fees ($) 12,000 8,500 10,000* 10,000* 12,658
6
Market capitalisation ($m) 1,970 638 967 2,815 2,486
Revenue ($m) 878 546 583 1,304 1,028
*Three organisations in the sample pay a $10,000 base fee to the Remuneration & Governance
Committee Chair which results in the same median and upper quartile data.

• Synlait’s Remuneration and Governance Committee Chair fee is
above the 75th percentile
• Synlait’s market capitalisation is above the median
• Synlait’s revenue is above the median.



Market data ($)

Synlait
25th
percentile Median
75th
percentile Average
Sample
size
Chair policy fees ($) 12,000 10,000* 10,000* 20,000 12,000
9
Market capitalisation ($m) 1,970 443 716 1,082 1,681
Revenue ($m) 878 545 615 1,113 960

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August 2018
Non-Executive Director fees benchmarking EY  10
5 Summary and recommendations
5.1 Chair
Synlait’s Chair fee of $150,000 is below the median of the comparator
group data for base fees at 89%.
5.2 NEDs
Synlait’s NED fees of $80,000 is aligned to the median of the comparator
group.
5.3 Committee Chairs
Synlait’s Chair fees for both Committees ($12,000) are above the
median ($10,000) of the comparator group
5.4 Conclusion and recommendation
Based on the comparator group organisations with a similar profile,
Synlait is ranked 6
th
equal to Sanford Limited on revenues. However, the
current fee structure for the Chair is not in line with the comparator
group.
Based on the information provided in this report, EY recommends that
Synlait consider increasing fees in line with the median of the comparator
group. This will result in the following increases:
► Increase the Chair fee from $150,000 to $169,000 (13%)
► Increase Directors’ fees from $80,000 to $85,000 (6%).
► No adjustment to Committee fees.
Thank you for the opportunity to assist Synlait. Please do not hesitate to
contact us if you require further information for this engagement.
Yours sincerely,



Una Diver
Partner – People Advisory Services
Ernst & Young Limited

EY | Assurance | Tax | Transactions | Advisory

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Our report may be relied upon by Synlait Milk Limited for the purpose of providing
market remuneration information only pursuant to the terms of our engagement
letter dated 6 May 2018. We disclaim all responsibility to any other party for any
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