The media went through the motions looking at the final payments to David Murray, the long time CEO of the Commonwealth Bank who retires next week.

Murray will leave the CBA with cash, shares, super and other payments, plus owning shares he’s accumulated in recent years.

The value of all this (some of which will flow in over the next four years) will be around $58 million, not Roger Corbett class (he’s around $80-$90 million), but enough to keep him in the style he’s accustomed to.

You have to look through the CBA annual report carefully to find the details of his pay but they are found around page 54.

Murray’s pay jumped $1 million to $5.4 million last year, thanks to a story term incentive of $760,000 ($450,000 a year ago) and a similar sized payment labelled STI deferred in cash ‘At Risk’ (nil the previous year).

In addition he gets $11.8 million in super (is that based on his final year’s or years’ salary? If it is it’s a nice gift from the board as his salary has doubled in the past three years). Murray will receive a further $2.3 million in accrued long service and holiday pay, $2.4 million in “Contractual Entitlements” and $1 million in “Deferred STI Payments”.

In addition he has around $10.4 million in shares to come over the next four years (268,000 shares in total) under the deferred long term incentive plan. This depends on the bank reaching certain hurdles.

That’s a good scheme as it makes sure whatever changes Murray has made in the past three years (and they have been considerable), he will only get his big payoff if those changes prove to be long lasting and profitable to the bank and shareholders.

That puts his total departure package at a smidge under $28 million (but will rise if the value of the bank’s shares increases).

But what no one realised, or they forgot, was that Murray already owns more than 670,000 CBA shares, worth well over $25.2 million.

On these shares, his dividend income (based on 2005’s total payout of $1.97) is $1.32 million, which about how much he was making about eight years or so ago.

If Murray received the additional shares over the next four years, his holding would total more than 938,000, worth more than $35 million at current prices, with a full franked dividend income approach $2 million a year. Very tasty indeed!

That’s more than enough to live on, without the cascade of cash, but because he’s worked for 39 years at the CBA, he’s entitled to his millions.

Peter Fray

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