Mild mannered Ten Network executive chairman Nick Falloon sure knows how to negotiate himself a good contract and if this keeps up he could one day find himself on the BRW Rich List.
Is Nick Falloon, the executive chairman of Network Ten, the wealthiest CEO in Australian media, apart from the proprietorial Packers, Stokes and Murdochs?
Ten’s 2004 annual report not only reveals an annual salary of $2.7, but that Falloon appears in the list of Top 20 shareholders of Ten for the first time with a holding of 1.419% or 5.625 million shares, worth almost $24 million on current prices.
Ten shares were trading at $4.25 each at lunchtime Friday.
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This shareholding came during the 2004 year when he exercised 5.625 million of the 7.5 million options he was granted when he was recruited to join Ten back in late 2001.The exercise price was set at the price of Ten shares in late 2001, so he would have been able to pay for the shares himself through the millions received after being sacked by James Packer from PBL in early 2001.
Therefore Falloon would probably have a profit of around $2.50 to $3 a share, a substantial gain, and once again proving how profitable it is for some to be flicked by Kerry Packer.
Over at Seven David Leckie was paid more than $3 million this year including the value of options, which is considerably more than what he was getting running the Nine Network for Packer.
And, of course former PBL CEO, Peter Yates received more than $10 million when ‘departed’ by the Packers last June. He also has loans for shares and a house and other financial structures from his time at PBL worth more than $20 million gross by some estimates. These are interest free to 2006.
But Falloon is a rarity in Australian media, a non-proprietorial executive chairman with a pretty big stake in the future performance of Ten, which, since he joined, has been markedly better each year.
It puts him in the vicinity of David Murray at the CBA, who is worth more than $30 million, based on shareholdings, salary and option deals. But Murray has been at the CBA 12 years, Falloon has been at Ten three, with a year to go on his contract.
But it is not often you see the CEO or chairman (non-proprietorial) of a large, important Australian company in the Top 20 list of shareholders, unless they are a Murdoch, Packer or Stokes. It is also a sign of how much Ten’s controlling shareholder, Canwest of Canada, wanted someone of his knowledge and ability to anchor Ten after the very costly plunge into so-called out of home advertising through EyeCorp, a move that cost Ten well over $120 million
Hiring Falloon for the four years involved a rich package back in 2001, but thanks to his efforts and those of other executives and employees at Ten, plus the greatest advertising boom the industry has enjoyed since colour TV started back in 1975, it has turned out to be a mega package, worth around $40 million or more by the time the four years are up in 13 months time.
Falloon may also still have shares in PBL. Last year he had an estimated $10 million worth. If he has held onto those, and with the share price rise PBL has enjoyed (north of $14) he could be another $10-12 million richer, and closer to Murray.
Details of his pay and shareholdings can be found here in the 2004 Ten Network annual report.
According to the report Falloon received a base salary of $1.444 million, a cash bonus of $750,000 and $437,516 worth of options. A total of $2.717 million.
The well-regarded head of TV at Ten, John McAlpine, was paid $1.44 million (more than David Gyngell at Nine, whose pay has risen since being made CEO in June). That included a base salary of $1.022 million. Gerry Thorley, who has whipped the old EyeCorp business back into shape, was paid more than $714,000. Grant Backley, the head of Network Sales received $706,000, David Mott, the chief programmer, got more than $671,000 and David White, the head of Sport at Ten, was paid more than $482,000.
The annual report reveals that Nick Falloon’s base salary of $1.545 million (including of super) is reviewable from December 21 this year for another year. His current contract expires on December 21, 2005, so next year could be a bigger year for him, with a possible renewal around the corner.
But with the media laws probably changing from the middle of next year, he could be in for a bigger payoff with Ten’s share price expected to rise further as speculation rises about whether it is a buyer or will be bought by someone else.
Falloon was paid a $400,000 sign-on fee in 2002. Nice, but not as tasty as the share options.
He had 7.5 million options under the a Ten executive scheme scheme, 5.625 million of which he exercised and converted into shares this past year according to the report, with the remaining 25% available within the next few months.
The next tranche of options will be fairly cheap, given the rise in the Ten share price since late 2001. Exercising these and taking the shares could take his total gross worth in Ten shares to over $30 million.
The annual report also reveals the basis for paying Falloon, McAlpine, Thorley, White, Backley and Mott with their contract details and termination sections published.
This year’s pay for Falloon is a rise of around $460,000 on the $2.25 million he was paid in 2003, while John McAlpine received about $90,000 more this year than last year when he was paid $1.35 million.