24/07/2015 - 13:20

CEO salary cuts reflect market conditions

24/07/2015 - 13:20

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When newly appointed managing directors agree to work for nothing, it’s a sure sign the cost pressures facing listed companies are getting more acute.

GOOD DEAL: Ryan Stokes has an annual salary of $1.6 million in his new role. Photo: Attila Csaszar

When newly appointed managing directors agree to work for nothing, it’s a sure sign the cost pressures facing listed companies are getting more acute.

A survey of Western Australian companies over the past three months has found many examples of directors’ fees being slashed and chief executives accepting lower salaries, though it’s not all one-way traffic.

Leyshon Resources illustrates the lengths to which some companies are going.

The board made the position of managing director redundant, with Corey Nolan moving to a non-executive director role, and all directors’ fees have been cut by 50 per cent.

It’s a similar story at Kula Gold, which has cut directors’ fees and chief executive Stuart Pether’s salary by half, closed its Sydney office and moved to a shared office in Perth.

Mineral resources company Gippsland, which is largely dormant after running into setbacks at its project in Egypt, has gone a step further by cutting most of its employees, closing its Perth office and running a ‘virtual’ office.

Some companies are softening the blow with more equity.

Applabs Technologies, which pioneered the latest backdoor listing wave in 2013, has cut managing director Patrick Glovac’s cash salary by nearly half and offered shares instead.

Latin Gold took similar steps; after twice cutting directors’ fees by 20 per cent, it has now decided to suspend the issue of any shares.

Some company directors have needed to pick up more work for less money.

RNI chairman Miles Kennedy, for instance, took a 15 per cent pay cut in May, to $98,000, but has since moved to an executive role after managing director Royce McAuslane’s resignation.

Mr Kennedy’s remuneration will be reviewed in August.

Several companies have agreed to interim remuneration plans with their new managing directors.

After investing in Luiri Gold, Stuart Murray has agreed to work initially at no charge on a part-time basis to identify new projects for the company.

Rampart Energy’s Iain Smith has agreed to an “initial reduced salary” of $180,000, while Sabre ResourcesDavid Chapman will initially work three days per week.

At the bigger end of town, Ryan Stokes started as Seven Group Holdings managing director on July 1, on total fixed remuneration of $1.6 million.

Depending on how you look at it, his father and company chairman, Kerry Stokes, got a good deal.

Ryan Stokes’ base salary has more than doubled from the $732,000 he was paid as chief operating officer, but it’s literally half that paid to his predecessor Don Voelte.

Other companies still able to pay attractive salaries include US-focused uranium developer Peninsula Energy.

Following a board restructure, John Simpson has been appointed managing director on a base salary of $600,000.

Talga Resources illustrates how companies can come through a tight period in better shape.

Managing director Mark Thompson experienced two pay cuts during 2013, bottoming at an annual salary of $198,000, and was not paid any salary in the month of July, but since then has been awarded two pay rises.

The company announced in April it had renewed his terms of employment, with a base salary of $348,000, more than he was ever paid before.

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