21/11/2006 - 21:00

Wesfarmers team reaps the rewards

21/11/2006 - 21:00

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Western Australia’s biggest industrial company, Wesfarmers, has become the place to work for ambitious young executives hoping to earn more than $1 million.

Western Australia’s biggest industrial company, Wesfarmers, has become the place to work for ambitious young executives hoping to earn more than $1 million.

Wesfarmers was one of just a handful of Perth companies that paid more than $1 million last year to executives below their chief executive.

Great Southern Plantations, Woodside Petroleum and stockbroking firm Euroz also had more than one executive earning in excess of $1 million, or very close to it.

A total of 17 non-CEO executives in WA earned $1 million last year, and most of them reached that level only because they received large bonuses or were issued options.

Topping the list was Mt Gibson Iron’s former managing director and current deputy chairman, Brian Johnson, who received a massive $3.1 million in share options last year.

Woodside development director Dudley Parkinson was one of the few non-chief executives whose base income exceeded $1 million.

Add in a modest cash bonus of $105,000 and Mr Parkinson’s total income reached $1.2 million.

The seven Wesfarmers executives who earned more than $1 million were headed by John Gillam, managing director of the Bunnings hardware division.

His package included a base income of $921,000. Add in a retention bonus, a cash bonus and share-based payments and Mr Gillam’s total income doubled to $1.87 million.

Notably, Wesfarmers’ executive team would have earned even higher incomes if they had achieved their financial and operational targets, which included divisional profit, divisional return on capital and safety measures.

The annual report disclosed that former Wesfarmers Energy managing director David Robb, who recently moved to Iluka Resources, did not qualify for any incentive payments.

The best performer was home improvement division chief operating officer, Peter Davis, who qualified for 55 per cent of his incentive payments.

In contrast to the modest bonuses paid at Woodside and Wesfarmers, Euroz, Great Southern and Alinta paid very large bonuses.

Euroz took an egalitarian approach, with executive chairman Peter Diamond, managing director Andrew McKenzie and executive director Jay Hughes all getting a $915,000 cash bonus.

Alinta general manager Chris Indermaur received a $750,000 discretionary bonus that would leave many people scratching their heads.

The bonus related to last year’s spin-off of Alinta Infrastructure Holdings. The spin-off transaction was executed successfully but strategically it has been a failure, as evidenced by Alinta’s decision last week to buy back its infrastructure arm.

At Great Southern, executive director Cameron Rhodes’ base income of $574,000 was more than doubled by bonuses and share-based payments, lifting his total income to $1.4 million.

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