Federated Farmers dairy section chairman Lachlan McKenzie said farmer shareholders would ask questions of company directors as they should when costs were rising, but he said Fonterra had sizeable offshore businesses and they had to compete for staff.
"Farmers will be asking some hard questions of directors to `please explain'."
Fonterra's 2008-09 annual report revealed that 2547 of its executives received salaries greater than $100,000, an increase of 825 on the previous year, with 1207 of those in New Zealand, 1237 overseas and another 103 who left the company.
But within the 2008-09 figure were six New Zealand and nine overseas-based staff who earned more than $1 million and another six who resigned with seven-figure payouts.
The highest-paid executive, believed to be chief executive Andrew Ferrier, earned between $3.62 and $3.63 million.
All this has occurred in the year the milk price to farmers fell from $7.66 a kg of milk solids (kg/ms) to $5.20 kg/ms.
Mr McKenzie said the main issue for shareholders was to ensure senior management had gone through the correct recruiting process and were not paying excessive market rates.
Shareholders had two opportunities to question senior executives, at a series of roadshows about to start and at next month's annual meeting in Ashburton.
Fonterra Shareholder's Council chairman Blue Read said executive salaries were outside the domain of the company watchdog, but he questioned whether $100,000 was today an excessive salary and if it was still an appropriate disclosure benchmark figure for companys to report.
With Fonterra an international company, he said it had to compete for staff in markets in which it operated - United States, Asia and Australia.
Asked if chief executive Andrew Ferrier deserved a salary exceeding $3.6 million, Mr Read said shareholders should view it as a cost of business.
"The reality is that is what the salary scales are and what you have got to pay to get good people."
It was up to the Fonterra board to set Mr Ferrier's salary and while he would not divulge that process, Mr Read said he was aware of it and satisfied.
Fonterra director candidate Russ Rimmington said the question over salaries was whether they were internationally relative and linked to performance.
He said part of Mr Ferrier's pay appeared to be performance-linked, as it fell from about $3.98 million in 2006-07 to between $3.62 to $3.63 million last year which coincided with a poorer performance of the company's value-added business.
Mr Rimmington said in his previous business experience when the chief executive salary rose, those of senior managers below also increased to ensure relativity was maintained.
