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$67m of steam for fat cat’s gravy train
ALMOST 20 per cent of chief executives at Australia’s biggest companies received bonuses in excess of $1 million last year despite the global financial crisis, the Daily Telegraph reports.
Although the share market suffered its worst 12 months since 1982, 33 chief executives shared $67 million in annual bonus payments, even as some of their companies’ shares fell by more than 50 per cent.
The findings are revealed in the first comprehensive study of directors’ pay, across all 193 companies that have reported full results for 2009 and where the chief executive has been in the job for the entire financial year.
The size of the bonuses is set to reignite debate over excessive pay in the boardroom – especially as millions of workers continue to suffer pay freezes.
The study was conducted by major independent executive pay consultant Guerdon Associates, which advises companies on executive pay packages.
Fattest cats
Top of the bonus pile is Allan Campbell of AJ Lucas Group, a mining services company, who received a bonus of $6.5 million in 2009, dwarfing his $500,000 basic salary.
The bonus was paid as the company share price more than halved, from $6.56 to $3.18, in the 2009 financial year.
Westpac chief executive Gail Kelly was the highest-rewarded woman on the list, coming in third with an annual bonus of $3.5 million. Ms Kelly also received 194,347 Westpac shares to compensate her for benefits that she gave up as chief executive of St George, her former employer – shares now worth $4.8m.
Across 193 companies in the survey, bonuses paid to chief executives totalled more than $95.7 million. Basic pay rose by an average of 13 per cent – almost four times the national average of 3.5 per cent.
But, overall, annual bonuses decreased by an average of 20 per cent, while the value of long-term incentive payments fell by 21 per cent, reflecting the fall in share prices.
Two chief executives appeared in the top 10 lists for both biggest bonuses and biggest increases to basic pay.
Woolworths’ Michael Luscombe received an annual bonus of $3.037 million, in addition to a pay increase of $284,000 which took his salary to $2.52 million.
Alongside him is Origin Energy’s Grant King, who received a bonus of $2.68 million, on top of a $272,000 pay rise which took his pay to almost $2.2 million.
Guerdon says that annual bonuses are paid according to targets based on earnings growth, not share prices. So, while investors may be nursing heavy losses, the chief executives can still rake in millions.
If a chief executive has hit his profit targets, then the annual bonus will kick in, said Guerdon’s Michael Robinson.
On the flip side, some executives have been praised and many analysts argue that these bosses deserve their bonuses.
David Jones boss Mark McInnes received a $2.67 million bonus, on top of his $1.97 million salary; but, not only did profitability improve by 11.8 per cent to $155.5 million, DJs share price rose by 59 per cent, from $2.86 to $4.55.
Mr Luscombe also boosted profits by 12 per cent to over $1.8 billion and presided over a 10 per cent share rise.
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