Boardroom Babble

By Peter Lewis

More tales from the lottery economy where a falling share price is no barrier to unimaginable wealth.

Cuff Sheds Crocodile Tears

Executive pay glutton Chris Cuffe this week sought to justify his $33 million golden handshake by claiming others had received more for less. The justification was given to a financial planning conference as Cuff bemoaned the media attention his windfall had attracted. Cuffe says some people had seen his payment as a "reward for no more than being lucky", given that his performance was aided by a rising share market during most of the period. But even if this were true, he said, his payment had not been at the expense of Colonial First State's customers. Colonial had charged lower fees than the industry average, had better products and produced better returns over the past decade. Cuffe now runs the Kerry Packer-backed CPH Investment Corp, which is set to emerge as a competitor to his old employer. As well, he has poached at least five of his former staff. (Source: SMH)

Seven Rewards Stokes

Meanwhile, Kerry Stokes will be compensated for the plunging value of his Seven Network shares, pocketing an extra $2.8 million in cash after the broadcaster this week raised its interim dividend for the first time in four years. Despite a five per cent fall in half-year profits to $51.8 million, Seven will lift the interim dividend from three cents a share to eight cents. The company's unexpected generosity - and news of a $100 million asset sale program to improve gearing - failed to halt the slide in Seven stock. Some say the company's money should have been spent cutting debt rather than funding an extra $7.5 million on the higher dividend.

Take Batchelor to Court, AMP Urged

Meanwhile, shareholder activists are urging AMP and Paul Batchelor to settle their fight over the former chief executive's payout package in court. The Australian Shareholders' Association chairman Ted Rofe said there were "quite strong grounds" for the matter going to court to finalise the battle over Mr Batchelor's payout, rumoured to be around $20 million. Rofe's comments came amid reports that Batchelor, who left AMP last September, remains firm in his resolve to fight for a $20 million payout from the troubled financial services giant. Batchelor has been under public pressure to cut the size of the payout he is believed to be demanding because of AMP's dismal financial performance which led to an $896 million loss for 2002. (Source: NineMSN)

Costello Joins the Hand-Wringing

The community outrage over corporate payouts has prompted the Government to harden its support for the introduction of an on-the-spot fine regime for companies that breach disclosure rules. Treasurer Peter Costello says the Australian Securities and Investments Commission would gain the power, which is expected to be included in the next amendment of the Corporations Act. The law would require the disclosure of the remuneration of the top five executives. Corporate governance experts believe non-executive retirement benefits are archaic and should be phased out, particularly as many non-executive directors are former chief executives who enjoyed large salaries in their previous roles. (Source: The Age)

Let The Geniuses Go!

And warnings that Australia could suffer a corporate "brain drain" if the Australian Stock Exchange goes ahead with plans to make companies disclose the remuneration packages of their top executives, from a leading company chief. Such plans, according to PricewaterhouseCoopers Australia chief executive Tony Harrington, will put private companies at a "distinct advantage" and will allow overseas companies to "shop for Australian talent". With the ASX's Corporate Governance Council drafting plans to introduce tighter disclosure rules on how companies detail the contracts of their top executives, Harrington says the commercial sensitivity of such information could put public companies - and shareholders - at a disadvantage. (Source: SMH)

Big Fat Kiss-Offs Live On

Many of Australia's largest companies are persisting with retirement payouts worth hundreds of thousands of dollars each to non-executive directors despite the furore over payments to retiring AMP directors. Telstra, Westpac, ANZ, Woolworths, Coles Myer and St George Bank are just some of Australia's big companies planning to continue the schemes. The Corporations Act allows for the payment of a benefit equivalent to three times the average annual fee and more if shareholders approve. But corporate governance experts now say such benefits are out of step. (Source: SMH)

Buffett Lashes Execs

But the final word this week from, billionaire investor Warren Buffett, who warned of skulduggery in US boardrooms long before accounting scandals brought down companies like Enron and WorldCom. In his annual letter to shareholders Buffet has called on chief executives to clean up their act, saying new measures designed to check wayward CEOs might not prove worthwhile. "Too many [CEOs] have in recent years behaved badly at the office, fudging numbers and drawing obscene pay for mediocre business achievements." But even as US companies face tighter rules on boardroom behaviour, Buffett says CEOs would no doubt fight meaningful change. "The acid test for reform will be CEO compensation," he wrote. While bosses would cheerfully agree to meaningless proposals, many would fight "a hard look at their own pay and perks". (Source: The Australian)

For further information

Contact:   Peter Lewis