Interview: The Wet One
Bad Boss: Like A Bastard
Unions: Demolition Derby
Corporate: The Bush Doctrine
Politics: American Jihad
Health: Secret Country
Review: Walking On Water
Poetry: The UQ Stonewall
Month In Review
The Locker Room
The Legacy of 11/9
The CFMEU Race Debate #2
Keeping it Clean
Sue the Leaders?
Wrong Way, Go Back
Shame on Murray
Use or Abuse of Long Term Casuals
Speaking in Tongues
Snouts in the Trough
The Cream from the Crop
The rules governing disclosure of payments to CEOs in company accounts mean that many of the revelations come months after the actual event; but at least they are out in the one.
What has been breathtaking is the large number of multi-million dollar payouts to departing directors, often supplement by secret options deals. We had earlier learnt of departing Suncorp Metway chief Steve Jones $16 million windfall, a $7 million ten-year anniversary present to Commonwealth Bank chief David Murray and BHP boss Paul Anderson's $18 million sign-off.
But the steady stream of excessive disclosures has become a torrent, as journalists for once cast their eyes over the accounts for similar payouts. In the past week we have had the following revelations:
- Coles Myer chief executive John Fletcher received a $7.7 million golden handshake from his previous employer Brambles Industries Ltd, it emerged today. The Brambles 2001/02 annual report shows Mr Fletcher took home $151,000 in salary and $735,000 in "performance related bonuses" last year. That was despite officially departing the transport and logistics group on 1 August 2001 - just one month into the financial year. That was topped up with a $7.7 million "termination payment" to Mr Fletcher, bringing his total remuneration during the one-month period to $8.6 million.
- Boralchief executive Rod Pearse is headed for the $3 million-a-year mark, after receiving a $2.8 million package in 2001-02. The building materials group's annual report for 2001-02, published yesterday, showed Mr Pearse received a base salary of $1.48 million for that fiscal year. He pocketed an extra $900,000 in "variable remuneration", as well as another $420,000 in shares and options. The total $2.8 million compared with the $2.3 million he took home in 2000-01, and represented a 21 per cent pay rise.
- Telstra chief executive Ziggy Switkowski enjoyed a pay rise last financial year, despite a slide in the telco's full year profit and its depressed share price. Switkowski, 54, received total remuneration of $2.4 million in the year to June 30, 2002, up from $2.35 million the previous year. It included $1.25 million in salary, benefits, superannuation and fringe benefits tax. The package also included a $1.15 million short term incentive paymet. Telstra last month booked a 9.8 per cent fall in full year net profit to $3.66 billion.
- Burns Philp CEO Tom Degnan has negotiated a $5 million golden parachute should control of the food group change hands. Degnan's payout, part of a new remuneration package negotiated when he relocated to the US in January, is triggered if Burns Philp is sold. Under the deal he's entitled to a lump sum equal to twice his annual base salary, maximum bonus and car allowance. Based on last year's annual report, the lump sum would be worth at least $5million.
- Leighton Holdings chief executive Wal King has joined the growing list of corporate leaders whose pay packets are in the multi-million dollar range.
Leighton's annual report shows King received a remuneration package of $4.14 million in 2001/02 which includes his salary, bonuses and superannuation.
In addition, a deferred incentive of $4.9 million has been paid into a deferred bonus account which will be paid able when certain hurdles are met.
- James Fielding Group took a rap on the knuckles from the central shareholder lobby group, over plans to dish out more than $1.7 million worth of options to its top executive. The property group bucked a new trend of scrapping executive option plans, when securityholders backed its proposal to issue 600,000 options to executive chairman Greg Paramor. The options were exercisable after two years at a strike price of $2.94, with no other conditions disclosed.
- Insurance Australia Group is also chasing options, asking shareholders to approve the grant of up to 300,000 options with a low exercise price to chief executive Michael Hawker at the November 13 annual meeting.Mr Hawker, who has been in the job less than a year, already has 1 million of the so-called "performance share rights" after receiving approvals from last year's meeting. If Hawker meets performance hurdles relating to the general insurer's total return versus S&P/ASX100 companies, he will pay only a "peppercorn" amount of $1 to exercise the latest rights and receive the shares.
Cochlear Ltd boss Jack O'Mahony has received a 64 per cent payrise in 2001/02. The bionic ear maker's annual report, sent to shareholders this week, shows chief executive Mr O'Mahony took home $959,359 in total remuneration last fiscal year, compared to $583,786 in 2000/01.
Bendigo Bank's highest-paid executive, managing director Rob Hunt, took home $577,328 in pay last financial year. The regional bank's 2002 annual report showed Mr Hunt had a base salary of $388,367 for the period and enjoyed a comparatively small bonus of $75,000. Hunt's wage is dwarfed by the money earned by the chief executives of other banks, but it also has a market capitalisation of $1 billion, against $32.9 billion for the Commonwealth.
- Newcrest Mining chief executive Russell Barwick's shock departure has cost the Melbourne-based gold producer close to $1 million in resignation benefits. Barwick resigned on September 18 last year after just 14 months in the job. His total remuneration package from June 30 that year until his resignation was $1.11 million, including a $922,500 resignation benefit.
Even Tories Feign Outrage
The revelations spawned two front page stories in this week's Daily Telegraph and intense hand-wringing from the Liberal Party, otherwise known as the political wing of the corporate sector The revelations moved Federal Employment Minister Tony Abbott to opine that some executive salaries were out of touch with reality. Tony Abbott says it is time company boards took a more reasonable approach to paying their executives. "I don't believe that you need to pay people astronomic salaries to get a good day's work out of them," Abbott says. "I think that old Australian adage, a fair days work for a fair days pay, I think that some of these senior executives really are dreaming frankly the amount of money they get paid." By the end of the week, even the Prime Minister had weighed in, saying: "you can't ask trade unions to display restraint ... if at the same time you turn a blind eye to people whoa re making too much of a welter of it". But he will!
A Bunch of Pigs
Finally, US journalist Robert Reno came up with this killer analogy: "If pigs are allowed to determine their own diets, experience shows they will eventually eat themselves into a state of stupefying and useless obesity. This is one reason sensible hog farmers know to feed their pigs with care." He made the observation as the Conference Board, a Manhattan-based research group, released a report finding that, left to themselves, corporate executives will also invariably demonstrate similar tendencies to overfeed themselves. "The ratcheting up of compensation has been obscene," said Warren Buffett, the legendary head of Berkshire Hathaway. "There is a tendency to put cocker spaniels on compensation committees, not Doberman pinschers."
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