Salaries High, Performance Low

As part of Labor Council's inquiry into executive pay, Bosswatch's Chris Owen has compiled this overview.

Profits are down for the top 500 companies but executive salaries are still on the rise. The total net profit of the top 500 listed companies in Australia fell 32 per cent for the latest half-year (which, for most companies, was the six months to December 31, 2001) yet executive salaries did not fall to match the poor performance ... in fact they rose about 7 per cent across the board.

Some senior executives did take cuts after their poor performance however these examples are limited and were far from proportionate with the drop in overall company profit.

National Australia Bank suffered a 52.5 per cent fall in net profit for the last 6 months, however Frank Cicutto still earned 2,927,291--a 7 per cent rise from the previous year. Woodside fell 37.9 per cent while CEO, J. Ankehurst's, salary rose 15.2 per cent to $2,081,110. Rio Tinto's profits fell 77.8 per cent and Leigh Clifford took a whopping 2.67 per cent pay cut to $2,355,404--how does he get by? AMP's net profit fell 54.2 per cent so Paul Batchelor felt it only fair he receive a 20 per cent pay cut to a measly $3,342,000.

Australian CEOs are the third-highest paid in the world after America's and Britain's. Chief executives now earn an average of $1.4 million - up 7 per cent on the previous year. The average wage is just under $40,000. A pensioner earns $200 a week, or $10,000 a year. In 1976, according to one estimate, CEOs earned three times the average wage. Today the average CEO, taking executive share options and bonuses into account, is paid 30 times the average wage. (source: The Australian)

Executives continue to expect full remuneration despite poor performances and increasingly, executives are walking away from bad situations with their bonuses. For instance, News Corporation went from a profit to a loss, the CFO still got a substantial bonus. Australian Gas Light Company with dwindling profits still made a large payment to the CEO. Pacific Dunlop has performed badly for some time, but again the departing CEO still got a bonus payment. Shareholders, through their boards, must enforce executive pay cuts in cases of poor performance--too few executives will take it upon themselves to do so. As one punter plainly put it "ANYONE could go in and lose a company $500 million...it takes a senior executive to expect to get paid for it."

CEO remuneration packages of the top 10 public companies

Poor Performers

Rio Tinto

Profits down 77.8% and although CEO, Leigh Clifford's remuneration took a slight fall from the previous year--down 2.6 per cent--there was an overall 30 per cent rise in senior executive wages. The six highest paid executives pocketed $9,353,000 up from $7,255,139 the previous year.

R L Clifford: $2,355,404
Sir Robert Wilson: $2,637,000
R Adams: $1,462,000
C R H Bull: $1,448,000
O L Groeneveld: $1,648,000
J C A Leslie: $1,072,000

National Australia Bank

Prior to its 52.5 per cent drop in profits, NAB spoke of a plan to cut $20 million from its senior executive salary pool and to halve bonuses paid to chief executive Frank Cicutto and other senior executives. However, Frank Cicutto's remuneration rose 24.7% to $ 1,921,408 and the top 5 executive salaries rose 31.7% to $7,493,373 from the 2000 total of $5,686,638.

Frank J Cicutto: $1,921,408
Glenn LL Barnes: $1,531,391
Stephen C Targett: $1,433,040
Robert MC Prowse: $1,347,535
Peter B Scott: $1,259,999

AMP

The economic downturn saw a 54.2per cent drop in this offshore investment giant. At the same time executive salaries took a battering. CEO, Paul Batchelor, took home $3,342,000 down from $4,192,000 the year previously and R. Yates took a massive decrease to $3,993,000, down from $5,734,000 the year before. One of very few, AMP's board stripped over 30 per cent off the wages of the top five executives from $15,839,000 to $10,451,000.

R. Yates: $3,993,000
T. Fraser: $2,552,000
A. Mohl: $1,354,000
M. de Cure: $1,177,000
W. Foster: $1,375,000

QBE Insurance

QBE went from a profit to a loss as its executives imbibed huge salary increases. Frank O'Halloran had a 61 per cent salary increase to put him over the million mark. The top six executive salaries rose 30 per cent to $7,292,000 from $5,611,000...a huge increase when you consider $3 million of last years total was spent paying out retiring executive R. Grant.

FM O'Halloran: $1,139,000
MD ten Hove: $1,758,000
SP Burns: $1,251,000
AT Lothian: $1,076,000
PE Grove: $1,075,000
TM Kenny: $ 993,000

Woodside Petroleum

Profits fell 37.9 per cent while Akehurst enjoyed a up 15.2 per cent pay increase. In all, the top five senior execs helped themselves to an 18.8 per cent increase from $5,267,167 the previous year to $6,260,469 this year.

JH Akehurst: $2,081,110
Chris Haynes: $1,269,230
Cyril Huijsmans: $ 861,915
Agu Kantsler: $ 688,864
Jeff Schneider: $ 680,165
Chris Cronin: $ 679,365

Ten Network Profits fell a whopping 80 per cent on the same time last year and remarkably John McAlpine celebrated with a 19.3 per cent pay rise. Overall, the top five executive salaries rose 6.1 per cent to $3,610,894.

J McAlpine: $1,163,333
G Thorley: $ 780,976
P Myers: $ 719,692
G Blackley: $ 520,395
D Mott: $ 426,498

News Corporation

This is an amazing story... just look at the numbers. The single biggest contributor to the fall in overall Australian earnings was News Corporation, which reported a loss of $1.04 billion for the December half--its second consecutive loss.

2001/2002 K R Murdoch: $14,406,844
C Carey: $10,741,440
P Chernin: $38,254,750
D F DeVoe: $ 8,939,160
J R Murdoch: $ 5,823,190
L K Murdoch: $ 4,933,460
A M Siskind: $ 7,011,410

2000/2001 K R Murdoch: $ 67,030,420
C Carey: $ 18,093,160
P Chernin: $100,277,570
D F DeVoe: $ 17,773,760
L K Murdoch: $ 17,243,350
A M Siskind: $ 17,773,760

More CEO Salaries

AGL profits down 60.2%... G. Martin $821,447

Amcor profits up 19.6%... Russell Jones $4,545,001

Amrad Corporation Consecutive Loss ...Dr Sandra Webb $819,284

Brambles Industries profits down 10.3%...Sir C. K. Chow $2,225,000

Brickworks profits down 39.9%...Lindsay Partridge $385,000

Caltex Loss to loss... Tony Blevins $675,528

Coles Myer up 8.2% from loss...John Fletcher $4,585,000

David Jones profits down 10.8%...Peter Wilkinson $1,305,001

Hutchinson Telecomm loss to loss...Barry Roberts-Thomson $710,023

Jupiters profits down 14.7%...Rob Hines $2,865,000

Magellan Petroleum consecutive loss...J. Kelly $365,000

Newcrest Mining profits down 38%...Tony Palmer $1,030,500

Novogen loss to loss... Christopher Naughton $375,000

Nufarm Profit to loss...Doug Rathbone $2,634,995

Orica profit to loss...Malcolm Broomhead $2,985,000

Publishing & Broadcasting profits up 17%...Peter Yates $5,275,000

Timbercorp profits down 90.8%...Robert Hance $275,000

Sources: Bosswatch database, BRW, Miriam Cirsic, The Australian, Business Sunday, Company Reports and http://www.asx.com.au

For further information

Contact:   Chris Owen
Phone:   9264 1691

© 2001-2002 Bosswatch is a resource for the labour
movement provided by the Labor Council of NSW
10th Floor, 377-383 Sussex Street, Sydney NSW 2000
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