Crisis? What crisis? Sky's the limit for high flyers
By Matt O'Sullivan | smh.com.au | 22 September
The global financial crisis has failed to significantly dent the pay cheques of some of Australia's highest-profile corporate leaders such as the former Qantas boss Geoff Dixon, setting the scene for a season of shareholder outrage over executive pay.
Mr Dixon, who stepped down in November, has drawn the ire of shareholders and staff for the second year running after it was revealed yesterday that he pocketed a salary of almost $11 million despite serving only five months as chief executive last year.
It also emerged yesterday that Boral's departing chief executive, Rod Pearse, reaped $11.5 million for the year to June, up from $6.7 million in 2007-08.
His pay included a $4 million "end of service" payment and $4.45 million in equity benefits, in a year in which the company's share price fell 34 per cent. Fury over executive salaries and bonuses will be front-and-centre of the upcoming season of annual meetings, and some boards are expected to cop substantial votes against pay packages.
Martin Lawrence, head of research at the proxy adviser RiskMetrics, said some companies were trying to rein in excessive salaries through freezes on base pay and declines in bonuses.
"But there are a lot of companies which are making gestures towards alignment [with shareholder returns] rather than taking meaningful steps – and those companies aren't going to get a terribly good reception from their shareholders," he said.
Since 2001 executive base pay at Australia's top 100 listed companies has more than doubled and average bonuses have tripled. Shareholder attention on Mr Dixon's pay will centre on a $3 million payment to compensate him after a law change in early 2007 put a $1 million cap on super contributions.
Qantas said Mr Dixon was "significantly disadvantaged" by the changes. But a new contract that Mr Dixon secured three months before the $11.1 billion private equity raid on Qantas was made public in November 2006 stated that "superannuation tax obligations will be met by Mr Dixon".
A union spokeswoman, Linda White, questioned why Qantas was compensating Mr Dixon for law changes when it was not doing likewise for staff. "The law changes but it stays the same for Qantas executives," she said.
"They are basically saying how tough it is and in the next breath they pay this enormous amount of money to executives on the way out." Mr Dixon's total salary of $10.7 million in 2008-09 included a base salary of $1.86 million, $657,500 in termination benefits and $1.7 million in annual leave.
He was replaced as chief executive last November by Alan Joyce, but remained as a consultant until March 31. The Qantas annual report, released yesterday, also shows that its former chief financial officer, Peter Gregg, pocketed $4.9 million after serving just three months in the role last financial year.
His salary included $1.76 million in termination benefits. Mr Joyce earned $3.7 million for the year ending in June, down from $5.1 million in 2007-08.
PaperlinX also revealed that its chief executive, Tom Park, received a total package of $2.3 million for the year to June – down from $3.2 million in 2007-08 – in a year in which the embattled paper merchant's share price fell by 73 per cent.
First published by Smh.com.au on September 22 2009
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