Shareholders unhappy with exec pay level

The Australian Shareholders Association (ASA) says there needs to be closer scrutiny
of outgoing executive benefits after Qantas Airways Ltd and Boral Ltd revealed hefty
payments for their departing chief executives.
The issue comes on the back of continuing shareholder and union concerns about some
of the remuneration packages paid to executives for the 2008/09 financial year, when
many companies reported falling earnings, lowered or scrapped dividends and cut
workforces.
Former Qantas chief executive Geoff Dixon received $10.70 million in his last year
at the national carrier, despite only serving as CEO for five months.
In 2008/09, Qantas culled 1,840 full-time equivalent management and operational
staff positions, and did not pay its shareholders a final dividend as it reported an
88 per cent in reported net profit to $117 million.
Mr Dixon stood down as chief executive on November 28, 2008, but stayed on for an
another four months to the end of March as a consultant.
For the total nine months, he received fixed pay of $1.86 million, $3.03 million in
long-term benefits and $3.17 million in share-based payments.
Mr Dixon's total remuneration was boosted by a termination benefit of $657,000 and a
$1.7 million annual leave payout.
While his total annual remuneration was 12 per cent lower from the $12.17 million he
received in 2007/08, and he received no cash bonus, ASA policy research manager
Claire said it still raised questions.
"The issue is the whole of what Mr Dixon did for the last nine months that he was
there, and why that would really be worth nearly $2 million in fixed remuneration
without all the other considerations that came into play," Ms Doherty told AAP.
"Particularly when they've had such a poor year, and shareholders are going to feel
the impact of that, it just doesn't make any sense."
ASA was unlikely to vote in favour of Qantas' remuneration report at its annual
general meeting on October, Ms Doherty said.
Ms Doherty said there needed to be closer scrutiny of termination payments to
executives.
"You can almost sympathise with boards when they say things like `we need to pay
this to keep people, we need to pay this to get people on board', but when they say
`we need to pay this for people to leave us' it makes no sense," she said.
Meanwhile, Boral chief executive Rod Pearse will receive a $4.04 million end of
service payment when he retires after 10 years at the helm of the building products
company on December 31.
That would take Pearse's total remuneration to $11.51 million, up from $6.66 million
in the previous year, Boral said in its annual report.
A company spokeswoman said the end of service payment would be paid out over a
period of at least 15 months and that the retirement benefit were approved by
shareholders when he was re-elected in 2004.
Excluding the end of service payment, the total is $7.47 million, including fixed
remuneration of $2.96 million, up from $2.71 million in 2007/08, and equity benefits
of $4.45 million.
Boral came under fire at its annual general meeting last year when its shareholders
voted against the company's remuneration report.
Boral later froze the fixed remuneration for the chief executive and other senior
executives from September 1, 2008, to September 2010.
Meanwhile, current Qantas chief executive Alan Joyce, who was appointed last
November, received total remuneration of $3.6 million for 2008/09, down from the
$5.09 million he received as head of offshoot Jetstar the previous year.
Former Qantas chief financial officer Peter Gregg, who played a key strategic role
under Mr Dixon, was paid a total of $4.88 million for his final six months at the
airline work up to his December 31 departure.
That was down from $6.18 million in 2007/08 and included a termination payment of
$1.76 million and an annual leave pay out of over $604,000.
Qantas shares closed steady at $2.78 while Boral shares dropped one cent to $6.14.