United they rise: adviser takes aim at bosses' pay
By Matt O'Sullivan | smh.com.au | 13 October
United group has joined a growing list of companies facing a shareholder revolt over executive pay after an adviser to large shareholders took exception to the salary and bonuses paid to the engineering and property company's boss, Richard Leupen.
A furore over the pay cheques of some of Australia's highest-profile corporate leaders threatens to give greater impetus to measures to curb executive excess.
Qantas faces the wrath of shareholder for the second year running at its annual meeting in Perth next Tuesday over a $3 million compensation payment to former chief executive Geoff Dixon.
In urging a vote against United's pay card and an issue of shares, the influential adviser RiskMetrics said the company substantially increased the bonus potential of Mr Leupen after having boosted his fixed pay the year before.
He signed a new contract earlier this year. United raised Mr Leupen's fixed pay in 2008 from $1.6 million to $2.5 million.
The company's latest annual report shows Mr Leupen had a total fixed pay of $2.3 million in 2009, which included a salary of $2.04 million and non-monetary benefits of $261,296.
United discloses annual bonuses a year in arrears. RiskMetrics said Mr Leupen's bonus indicated that he received a "very high proportion of his maximum bonus potential".
"This indicates that the CEO has less demanding bonus hurdles than other senior United Group executives," it said.
Mr Leupen's total package rose from $3.98 million in 2008 to $4.55 million this year. Included in his package this year was a salary of $2.04 million and non-monetary benefits of $261,296.
RiskMetrics said the increase in Mr Leupen's bonus potential was compounded by a rise in his fixed pay over the past two years.
His total annual cash remuneration for 2009 was up to $4.6 million. in 2007 it was $3.2 million.
"United Group did not provide any material information as to why it increased Leupen's fixed pay so substantially between 2007 and 2008, nor has it provided any information as to why it has increased his bonus potential," RiskMetrics said.
His disclosed pay was 3.2 per cent of United's profit. Under his new contract, Mr Leupen is entitled to a "succession incentive" in the form of shares with a value of $500,000 a year.
"This appears to be providing additional rewards for performing a central part of his normal responsibilities," RiskMetrics said.
"In addition, by buying the shares to be delivered on market, United Group is avoiding the need for shareholder approval of these grants."
RiskMetrics said United paid bonuses to senior executives in the 2008 financial year despite not meeting its performance targets. The company allocated 50,000 shares to each of its six senior executives in May for retention purposes.
The proxy adviser is recommending a vote against the retention grants. United's annual meeting will be held in Sydney on October 22. Leighton Holdings boss Wal King, has been the highest earner of Australia's executives so far this year.
His total of $12.6 million means he surpasses BHP Billiton's chief executive, Marius Kloppers, on $US10.39 million ($11.5 million), Boral's Rod Pearse ($11.5 million) and Mr Dixon ($10.7 million).
First published by Smh.com.au on October 13 2009
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