Given that he only retired as CEO at 10am last Friday, it was disappointing that Fred Hilmer did not stick around to bid farewell to Fairfax shareholders at the ensuing annual meeting in Sydney. Former chairman Dean Wills happily sat in the front row and rose to acknowledge the applause when his replacement, Ron Walker, introduced him to the meeting.

Dean Wills has been an old mate of Fred’s on the Westfield board for a decade, and now it looks like they’ve done a cute salary packaging exercise that may raise a few eye-brows at the ATO.

Fairfax announced on August 29 that Hilmer would go out with a juicy golden parachute, but Hilmer himself refused to be drawn beyond this one-paragraph statement from the board: “The board has determined a retirement allowance of $4.5 million for Mr Fred Hilmer, consistent with his employment arrangements and reflecting the timing and circumstances of the transition.”

Suspicions arose when Hilmer referred all questions on the payment to the board and the 2004-05 Fairfax annual report revealed that he received no short term bonus in his final year, after he was paid a bonus of $1.06 million in 2003-04. This meant his overall salary fell from $2.48 million to $1.5 million in a year when profits were up and Fairfax shares rose about 50c or 14% over the year.

Ron Walker said last Friday that the full amount was provisioned in the 2004-05 accounts, although they won’t appear next to Fred’s name until the next annual report.

I asked Walker to provide a breakdown of the figure for shareholders, or if this wasn’t possible, whether any further breakdown would be released in 2005-06 annual report. After all, this is normal practice for most companies, but Walker wouldn’t give an inch, again raising suspicions.

This is how Jeni Porter reported the exchange in The SMH:

Mr Walker refused to disclose how the payment to Mr Hilmer was calculated but said the departed chief executive was paid less than his peers and had forgone a bonus. When Mr Mayne asked if the deal was structured to take advantage of retirement-related tax breaks, Mr Walker said it was all above board and sanctioned by Fairfax’s in-house counsel, Gail Hambly. Mr Hilmer quit the board yesterday and did not attend the meeting.

Any retirement payments that Fred has been paid will only be taxed at the 15% rate and any termination payments will only pay 21.5% to the tax office. This means that Fred will have a lot more money in his pocket than if he’d just been given a big final bonus for performing so well over the past seven years.

I’m no tax expert, but all this secrecy and unusually limited disclosure is not a good sign for a company that itself runs daily scrutiny on society and business.