Chairmen’s pay up as roles broaden

THE role of chairman at Australian public companies has traditionally been reserved for experienced industry professionals tired of working in an executive capacity and who are keen to bring an independent viewpoint to the company boardroom.

Shareholder representative groups such as the Australian Shareholders Association have also firmly pushed for chairmen to turn down executive responsibilities in order to better represent the interests of ordinary shareholders.

Consequently, chairmen have traditionally been fairly modestly rewarded in comparison to their executive peers at the boardroom table.

Yet the increasing legal liability and obligation of directorships, even non-executive positions, has made it steadily tougher for companies to find and retain suitable candidates for the chairman’s seat.

Many smaller companies also argue that the prescriptive approach adopted by organisations such as the ASA do not always suit the needs of junior companies, which lack the resources to support a top-heavy board with a majority of independent directors and headed by a non-executive chairman.

Not surprisingly, that has led to a steady increase in the level of remuneration paid to WA company chairmen, and is often also associated with a blurring of the roles between executive and non-executive board roles.

About 85 of the 318 chairmen identified in WA Business News’ annual survey are listed as also having an executive role, representing almost 27 per cent of the total number.

That is reflected in the fact that 30 of the state’s 50 highest paid chairmen are also classified as executive officers of the companies they represent. And big dollars do not always equate with big market capitalisations.

Last financial year, the state’s best paid company chairman was Allied Gold chairman and managing director Mark Caruso, who took home a tidy $5.36 million, up more than 240 per cent from the $1.56 million he earned in 2008-09.

In a sign of the more entrepreneurial approach taken by many smaller WA companies in recent years, Cape Lambert Resources executive chairman Tony Sage was the second best paid WA chairman last year, with a package worth almost $2.8 million. After including his entitlements as executive chairman of Cauldron Energy, Mr Sage’s earnings topped $3.3 million.

The non-executive chairman of potash explorer Elemental Minerals Mark Jones was surprisingly next on the list with a scrip-heavy package worth $2.25 million, a 3,600 per cent rise on his pay the previous year.

But the chairman to achieve the most spectacular rise in pay was another non-executive chairman, Iron Road’s Julian Gosse, whose pay rose a mammoth 10,000 per cent from $12,500 to $1.26 million, making him WA’s fourth highest-paid chairman.

Another non-executive chairman, Aurora Minerals’ Phillip Jackson, was ranked fifth after a 1,110 per cent rise lifted his annual pay packet to just less than $735,000.

Perhaps surprisingly, the non-executive chairmen of WA’s two largest companies, Woodside Petroleum and Wesfarmers, only barely made it into the top 10.

Woodside’s Michael Chaney ranked ninth with a package worth $643,100, while Wesfarmers’ Bob Every ranked 10th with a $610,000 package.