21/11/2006 - 21:00

Plenty of reward options for local company chairs

21/11/2006 - 21:00

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Wesfarmers chairman Trevor Eastwood sits at the blue chip end of the business spectrum, while Reg Gillard is a veteran mining promoter at the more speculative end of the market. What they have in common, however, is a big income from their directors’ fees

Plenty of reward options for local company chairs

Wesfarmers chairman Trevor Eastwood sits at the blue chip end of the business spectrum, while Reg Gillard is a veteran mining promoter at the more speculative end of the market. What they have in common, however, is a big income from their directors’ fees.

Mr Eastwood illustrates the very large fees paid to the chairmen of Australia’s biggest companies.

He was paid $437,600 last year for his role as non-executive chairman of Wesfarmers.

Woodside chairman Charles Goode, who is due to be replaced by Michael Chaney, earned even higher fees of $446,190 last year.

Mr Gillard, by contrast, is chair-man of a large number of small companies, which collectively make him one of the best paid directors in Perth.

He currently chairs eight companies, including Aspen Group, Pioneer Nickel, Lafayette Mining and Eneabba Gas. They paid Mr Gillard a total remuneration last year of $703,000, split equally between cash income and share options.

Another prolific director is former lawyer Peter Mansell, who is chairman of mining company Zinifex, WA Newspapers (since last month) and Ferngrove Vineyards Estate, and is a director of several other companies.

Cash income from his main board positions will be more than $650,000 this year.

Most listed companies have a policy of paying a fixed sum to their non-executive directors, and explicitly prohibit any incentive payments such as share options.

Little known iron ore explorer Australasian Resources and booming uranium explorer Paladin Resour-ces are exceptions to this pattern.

Australasian chairman Domenic Martino, who has attracted controversy due to his high income at other companies, including Sydney Gas, was granted options worth $3 million.

Paladin chairman Rick Crabb has received very modest fees in the past but his total remuneration was boosted last year to $414,275 as a result of share options.

With Paladin due to commence its first mining operation next year and start generating a cash flow, that is likely to change. Mr Crabb’s fees have already increased from $26,000 in 2005 to an annual rate of $115,000 currently.

Another rule for most companies is that the chairman’s income is limited to his or her fees.

Several mid-sized WA companies, including Clough, Evans & Tate, Aztec Resources, Joyce Corporation and Clinical Cell Culture, were exceptions to this rule.

The chairmen of these companies all earned substantial additional income from consulting and other services.

Evans & Tate chairman John Hopkins had a particularly busy year as the winemaker went to the brink of failure before starting to recover. Mr Hopkins earned $164,500 in consulting fees, lifting his total income to $266,650.

Joyce chairman Dan Smetana became actively involved in management of his company, which went through a major restructuring, including the sale of its manufacturing arm.

He was paid about $137,000 for his management work, lifting his total income to $230,000.

Aztec disclosed that its chairman, Ian Burston, consulted to the company one to two days per week at a rate of $1,800 per day.

Alinta’s non-executive directors do not earn consulting fees from the company but it does have the curious practice of paying an exertion allowance.

Directors Fiona Harris and Tina McMeckan were each paid a $20,000 exertion allowance last year for undertaking “exceptional additional” work.

Some large businesses paid surprisingly modest fees to their chairmen.

Transportable accommodation builder Fleetwood, for instance, generated sales of $254 million and a net profit of $21 million last year, yet its chairman, Peter Gunzburg, was paid just $50,000.

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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