Pay trimmed for new CEOs

The median base pay of newly appointed chief executives at listed Perth companies fell this year to $295,000, a survey by Business News has found.

Fifty-two listed companies have either appointed a new chief executive, or revised the remuneration package of their existing chief executive, this year.

The survey also encompassed established companies such as Australis Oil & Gas, Veem and Swift Networks, which revealed their chief executive salaries after listing on the ASX.

The 52 companies span the broad spectrum of business in Western Australia, with the top end featuring Iluka Resources, Automotive Holdings Group and Austal, which continue to pay $1 million-plus salaries.

At the other end sit cash-strapped junior explorers such as Rey Resources, which appointed non-executive director Jin Wei as its managing director in July.

Despite the extra responsibilities that come with the role, Mr Wei’s remuneration was unchanged from the $60,000 he was paid previously.

Right in the middle was Excelsior Gold, which this year joined the ranks of gold producers in WA.

The $295,000 base salary (inclusive of superannuation) paid to new managing director Rowan Johnston was the median in this year’s survey.

The 2016 median was down from $370,000 in last year’s survey, though that looks like an aberration.

It was also down from 2013 and 2014, when the median was about $330,000.

Trouble-plagued mining contractor Macmahon Holdings highlighted the trend toward lower salaries, disclosing this month that new chief executive Michael Finnegan would be paid a base salary of $530,000.

His predecessor, Sy van Dyk, who held the job for only 16 months, was on a notional base salary of $650,000 but in practice that was cut by 10 per cent because of a nine-day fortnight the company adopted to reduce costs.

More significantly, Mr van Dyk’s salary was way below his predecessor, Ross Carroll, who was paid $1.1 million per annum.

Mr Finnegan will have more upside than his predecessor if he turns the business’s performance around.

He will be able to double his salary each year if he hits the unnamed performance targets in his short-term incentive plan.

By comparison, Mr van Dyk’s short-term bonus was capped at 50 per cent of base salary if he hit ‘target’ performance levels, and 75 per cent of base salary if he hit ‘stretch’ goals.

Mr van Dyk’s incentive scheme was typical of mid-cap companies.

NRW Holdings, Southern Cross Electrical Engineering and Triton Minerals, for instance, all cap their annual bonus at 50 per cent of base salary.

In contrast, the annual bonus at bigger companies such as AHG and Austal is up to 100 per cent of base salary, and even more for meeting stretch targets.

NRW Holdings and Decmil Group are two examples of listed companies that cut the remuneration of their existing chief executive.

NRW chief Julian Pemberton had his base salary cut from $1.3 million to $800,000 in January.

Decmil chief Scott Criddle agreed to a 15 per cent pay cut, above the 10 per cent cut that applied to his senior management team.

Going against the trend was Neometals, which rewarded managing director Chris Reed for the company’s progress at the Mt Marion lithium project.

As well as extending Mr Reed’s services contract by three years, his base pay was increased from $400,000 to $540,000 (inclusive of superannuation).

Aspiring uranium miner Deep Yellow crafted an innovative remuneration package to lure former Paladin Energy boss John Borshoff.

Its consultancy agreement includes an annual fee of $385,000, plus GST and on-costs, plus unspecified contributions towards annual leave, sick leave, superannuation and other expenses.

More significantly, the consultancy agreement includes a sign-on bonus of 30 million shares and a long-term incentive of 70 million shares that will vest over three years.

If the uranium price ever recovers and Deep Yellow joins the ranks of producers, Mr Borshoff and other shareholders in Deep Yellow will be big winners.