Gunns boss Greg L'Estrange said that the state's forestry deal could fail if those associated with the company did not receive adequate compensation.

Mr L'Estrange, who was appointed to the Gunns board with the new title of managing director yesterday, said after the timber company's annual meeting that it expected adequate federal government compensation for its workers, contractors and shareholders as it pulled out of native forests.

Compensation and pulp mill finance were major issues raised at one of the quietest Gunns annual meetings for some time.

Company chairman Chris Newman said that Gunns had expected to announce its preferred partner for the pulp mill by the time of the meeting but the due diligence process had taken longer than anticipated.

Mr L'Estrange said that Gunns' contribution to the forest reforms, which are based on a statement of principles signed by industry and environmental groups last month, was to pull out of native forests.

But without federal government compensation, he said the company and the industry would be back to "square one".

"We would all be back to looking to retain harvest levels at their traditional levels, which are, through state legislation, put at 300,00 cubic metres per annum.

"I don't think that would be a good outcome or resolution of this conflict that has been going on in Tasmania for far too long."

Mr L'Estrange said that Gunns believed those people who were affected by a change in social policy should be fairly compensated.

"That's our contractors ... and people like Gunns who enable the industry to restructure - for those reserved areas to be put into parks for the longer term.

"And there's infrastructure such as roads that should be recognised in the process."