The
Saturday papers were full of the huge deferred bonus payment to
long-serving Leighton Holdings CEO Wal King – but everyone seems to
have missed what might be a very interesting tax angle. The AAP
coverage began as follows:

The chief executive of Leighton Holdings Ltd, Wal King, is
set to remain at the helm of Australia’s largest construction company
after a receiving a $25.3 million bonus. The Leighton board is
currently negotiating a new employment contract with Mr King and said
that “progress is being made.”

Mr King has indicated his
intention to remain as chief executive until 2008, following the expiry
of his existing contract in December 2005. The board has paid Mr King
$16 million in deferred incentive bonus entitlements for the
twelve-year period from 1988 to 2000. Mr King also received interest on
the deferred incentives worth an additional $9.3 million.

Crikey would love to know if Wal King had been angling to “do a Chris
Cuffe” and emulate the deal which saw the former Colonial First State
CEO walk out of the Commonwealth Bank with a $30 million payout that
only attracted 21.5 per cent in tax because he was “terminated.”

Anyone
who has been fired knows that there are very handy tax benefits to be
had, and it is amazing to list the number of former CEOs who appeared
to retire amicably but still walked out with a “termination benefit.”
Paul Anderson at BHP and Ted Kunkel at Foster’s are two names that
spring to mind.

The Leightons announcement

on Friday was curious to say the least. Chairman Geoff Ashton is
straight as they come, so we’re not suggesting for a minute that he was
party to any structuring that somehow allowed Wal King to continue in
the job after being terminated. Wal might have been leaving his bonuses
inside Leighton over the years with something along these lines in
mind, but it may not have come to pass. The big question remains: did
he pay full freight to the ATO and was he paid even more by Leighton to
compensate for this?

Any
tax experts out there with insights on CEO tax planning around the
generous termination concessions available from the ATO should email [email protected]