An exclusive club

A total of 22 business executives working in Perth or working for Perth-based public companies earned total income of more than $1 million last financial year.

Eight of these people work for Wesfarmers, which can now be dubbed Western Australia’s ‘millionaires’ factory’ – a term normally applied to the highly profitable Macquarie Bank.

The inclusion of so many people from Wesfarmers is not really surprising.

It is the State’s largest company with a market capitalisation of nearly $14 billion, and each of its operating divisions, such as Bunnings and CSBP, is substantially larger than nearly every other WA company listed on the Australian Stock Exchange.

While Wesfarmers has plenty of high income earners, it also consistently delivers above-average returns to its shareholders.

As a result, it has never had to deal with angry shareholders complaining about excessive salaries.

The payments to Wesfarmers executives – like for many other big companies – have a large portion that is ‘at risk’.

Deputy managing director Richard Goyder is a case in point, with just less than half his total income ($693,000) fixed and the balance ($763,000) made up of a cash bonus and shares.

The State’s second biggest company, Woodside, has three people in the million dollar club.

Last year’s top earner was Steve Ollerearnshaw, a Shell expatriate and chief executive of North West Shelf Ventures, who earned $1.43 million.

Woodside’s new managing director, Don Voelte, who started in April, makes the list on the strength of his base salary of $1.35 million.

Depending on Woodside’s future performance, Mr Voelte could earn incentives worth up to 122.5 per cent of his base salary, taking his total income to just over $3 million.

Keith Spence, who spent most of last year as acting chief executive and is now chief operating officer, did not quite make it into the million dollar club. His total remuneration last financial year was $0.97 million.

Most of the people in the ‘million dollar’ club work for companies ranked in the State’s top 10 by market value, including Foodland, Alinta, nickel miner Minara Resources, mineral sands miner Iluka Resources, and investment scheme manager Great Southern Plantations.

There are three exceptions to this pattern.

Gold miner OceanaGold, which was spun out of GRD earlier this year, recruited former Barrick Gold vice-president Stephen Orr as managing director.

Mr Orr, who was recruited to guide OceanaGold through a period of rapid growth, earns a base income of $1.16 million with potential to more than double that via bonus and option schemes.

Engineering company Clough recruited UK executive David Singleton late last year to lead the company out of a protracted period of contractual and financial problems.

Mr Singleton’s total income of $1.16 million last year included an annual bonus of $300,000 but he told the company’s recent annual meeting that he and other senior executives had deferred receipt of their bonuses in light of the company’s continuing problems.

A surprise inclusion on the list is Gavin Rezos, managing director of nanotechnology company pSivida (see article below).

West Australian Newspapers and Hardman Resources, which are among WA’s top 10 companies by market value, are notable exclusions from the ‘million dollar’ club.

WA Newspapers managing director Ian Law sat just outside the door of the club, earning total income of $947,005, while Hardman’s recently retired managing director Ted Ellyard earned a modest $562,447.