Salary bonanza for top executives

While millions of Australians have either lost their jobs, seen wages frozen or been forced to work fewer hours to cut wage bills, the bosses of some of our biggest companies have helped themselves to double-digit hikes of their base salaries.

In many cases, the rises have helped cushion the effect of falling performance-related bonuses as the economic downturn kicked in. So far, 32 of Australia’s biggest firms have submitted their full results for the 2009 financial year, and they make staggering reading: 18 chief executives have received salary increases averaging just under 10 per cent. That is more than double the national average wage rise of just 3.8 per cent.

Analysis by The Sunday Telegraph shows that the average chief executive of these 32 companies now earns a basic wage of $1.87 million, plus bonuses and other benefits.

The largest increase was the 19.29 per cent rise given to Marius Kloppers at BHP Billiton, despite a 21 per cent decline in its share price, a 30 per cent drop in earnings and 3000 workers being sacked. The pay hikes will infuriate investors who have seen the value of their shares and super funds decimated while their savings are used to line executives’ wallets.

The All Ordinaries Index was down almost 25 per cent over the 2009 financial year, and corporate profits down by an average of 18 per cent, forcing tens of thousands of workers to delay retirement to try to make up the losses.

But this is all in stark contrast to the financial bonanzas in the boardrooms. Peter Anderson, chief executive of the Australian Chamber of Commerce and Industry, says the salary increases are too much in the current climate. “Executives’ reward should bear a relationship to both a company’s performance and the overall economic circumstances,” he said. “When restraint is being asked of lower-income employees, a similar level of restraint should be exercised at an executive level.”

However, the message does not seem to be getting through. Paul O’Malley, CEO of BlueScope Steel, has cut jobs, shifts and overtime for many of his 10,000 workers. He recently told journalists: “In the end it’s a business and we have to survive, and it’s been pretty challenging. It’s probably not all over yet. I still think there’s probably some hard times to come.”

But not for him. Despite watching his company’s share price fall from $8.91 last July to just $2.52 a year later, he still received a 10.47 per cent pay increase. At other companies, the tough times have provided profitable opportunities.

Chris Lynch was appointed chief executive of toll-road operator Transurban Group in July, 2008. His predecessor, Kim Edwards, earned a basic wage of $1.289 million in his last year in the job but Lynch started on a salary of $1.98 million — 53 per cent more than Mr Edwards, despite the economic gloom.

“It looks like it is better to be a chief executive in bad times than when the economy is booming,” said Sven Restel of investment analysts Wise Owl. “Sure, he didn’t pay himself a big bonus but he did manage to raise his base salary during a time when steel prices fell through the floor and many thought China would crash.”

Rupert Murdoch, chairman and chief executive of News Corp, owner of The Sunday Telegraph, awarded himself no increase in salary in 2009, keeping his pay at $US8.1 million ($9.3 million).

The rises resemble trends in the UK, where chief executives’ pay has increased by 10 per cent despite a record decline in the FTSE100 and the worst recession in decades. The average FTSE100 boss earns a basic salary of pound stg. 791,000 ($1.486 million). Based on Australian companies reported so far, that’s almost $400,000 less than the average Aussie chief executive.

ACTU Secretary Jeff Lawrence said ordinary workers would be outraged. “Working Australians fail to understand how CEOs can pocket double-digit pay rises at a time when hundreds of thousands of workers have lost their jobs,” he said.

“Excessive salaries and performance bonuses were a major cause of the financial crisis by feeding a high-risk business culture that was focused on short-term returns rather than building strong and sustainable businesses.”

“The imminent review on executive pay by the Productivity Commission should adopt a cap on pay.”

* Making Money

Marius Kloppers, BHP – 2008 base salary: $1.928m +19.29% 2009 base salary: $2.3m

Ralph Norris, CBA, 2008 base salary: $3.122m, +4.19%, 2009 base salary: $3.253m

Paul O’Malley, Bluescope Steel. 2008 base salary: $1.508m +10.5% 2009 base salary: $1.666m

Brian McNamee, CSL. 2008 base salary: $2.048, +5.7% 2009 base salary: $2.165m

Chris Roberts, Cochlear, 2008 base salary: $950,000 +10%. 2009 base salary: $1.045m

Jerry Maycock, CSR. 2008 base salary: $1.225m, +4.6%, 2009 base salary: $1.281m

Peter Margin, Goodman Fielder. 2008 base salary: $1.354m, +6.8% 2009 base salary: $1.446m

Derek O’Neill, Billabong. 2008 base salary: $1.082m, +5.7%, 2009 base salary: $1.144m

Louis Gries, James Hardie, 2008 base salary: $1.004m, +3.2%: 2009 base salary: $1.036m

Paul Little Toll Holdings 2008 base salary $2.079m +3.8% 2009 base salary $2.159m

John Grill Worley Parsons, 2008 base salary $1.427m +16.1% 2009 base salary $1.658m

Douglas Trough Ansell 2008 base salary $965,192 +4.3% 2009 base salary, $1.007m

Richard Uechtritz, JB Hi Fi 2008 base salary $907,207 +13.89% 2009 base salary, $1.033m

Andrew Reizter, Metcash 2008 base salary $1.471m +9.7% 2009 base salary, $1.614m

David Deverall, Perpetual 2008 base salary, $950,000 +0.6%, 2009 base salary, $956,043

Chua Sock Koong, SingTel 2008 base salary, $936,417, +17.4%, 2009 base salary, $1.099m

Nick Collishaw, Mirvac, 2008 base salary: $1.804m, +1.8%, 2009 base salary, $1.837m

Paul Reynolds, Telecom NZ, 2008 base salary: $1.083m, +32% 2009 base salary: $1.430m