EIGHT Western Australian companies paid their chief executives $1 million or more last financial year, WA Business News’ annual salary survey has found.
The survey also found enormous variation across WA’s top 50 listed companies, with about one quarter cutting pay to their chief executive.
The State’s most highly paid chief executive was once again Wesfarmers’ Michael Chaney, who took home $5.7 million for the year.
This was despite Mr Chaney agreeing to rejig his incentive scheme, after it became apparent that payments would have risen to levels beyond that originally envisaged.
This resulted in Mr Chaney’s total remuneration falling 27 per cent last year.
Other highly paid chief executives included: Foodland’s Trevor Coates, up 7 per cent to $1.9 million; Anaconda Nickel’s Peter Johnston, up 51 per cent to $1.5 million; and Alinta’s Bob Browning at $1.3 million.
Three people in the $1 million club are no longer in the job – Woodside managing director John Akehurst, Futuris executive chairman Alan Newman and ERG managing director Peter Fogarty.
The biggest pay rise for the year went to Kresta managing director Tass Zorbas, whose total remuneration rose 186 per cent to $674,195.
This was greatly helped by a grant of options valued at $270,000 and an annual bonus of $75,000.
Mr Zorbas’ pay rise followed a 66 per cent jump in net profit to $8.6 million and a strong rise in Kresta’s share price.
GRD’s Brett Fogarty (up 133 per cent), BankWest’s Terry Budge (up 97 per cent) and Croesus Mining’s Michael Ivey (up 111 per cent) were other chief executives who benefited from option grants and/or bonuses.
Chemeq executive chairman Graham Melrose, who has overseen substantial progress in commercialisation of the company’s drug products, enjoyed a 126 per cent pay rise without any help from bonuses or options.
On the other side of the equation, IMF’s Hugh McLernon, St Barbara’s Stephen Miller, Arc Energy’s Eric Streitberg and AdultShop.com’s Malcolm Day all saw their total remuneration decline sharply last financial year.
In these cases, the reductions were because options were granted in 2002 but not in 2003.
Putting aside the options deals, some of these people actually received a higher cash income.
Mr Miller’s income more than doubled to $550,069, even though the company posted an increased loss, while Mr Day’s base income rose by 14 per cent.
The survey found that most companies have both an annual bonus scheme and a long-term incentive scheme.
Just under half of the top 50 chief executives received an annual bonus while several others failed to achieve the (unspecified) performance hurdles to qualify for a bonus.
Woodside’s Mr Akehurst received the highest bonus of $600,000 while Wesfarmers’ Michael Chaney and BankWest’s Terry Budge received $500,000 bonuses.
Other recipients of big bonuses included Anaconda’s Peter Johnston, Foodland’s Trevor Coates and GRD’s Brett Fogarty.
Seventeen of the top 50 chief executives received long-term incentive benefits.
The aim of these schemes is to align the long-term interest of the CEO with those of the shareholders.
The incentive benefits generally come in one of three forms.
Woodside, Foodland and WA Newspapers are examples of companies that offer interest-free loans to the chief executive to buy shares.
WA Newspapers’ Ian Law, for instance, took out a $2.6 million loan last year to acquire 500,000 shares, giving him an interest benefit of $118,825.
BankWest, Fleetwood, Kresta and Croesus Mining provide a long-term incentive by granting options to the chief executive, giving him the right to buy shares at a discounted price at a specified time in future.
Finally, Wesfarmers and Tap Oil make cash payments to their chief executives if they meet long-term performance targets.
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