Michael Pascoe writes:

Pokie machine manufacturer
Aristocrat Leisure has had a colourful history, giving it a profile
that one might think the board would want to consign to history, so to
speak.

There was a whole saga involving founder Len Ainsworth
that still sees the main shareholding family without board
representation, then of course the disastrous stewardship of Des
Randall that deep sixed the share price with funny business in
Columbia, not forgetting the lamentable chairmanship and greed of the
late Bruvver Ducker followed by the appointment of the now Chief
Federal Magistrate John Pascoe as chairman – an appointment that itself
looks questionable in light of Justice Gyles’ scathing trade practices
judgement against George Weston.

So you would think that the
Aristocrat board would be very happy to keep well away from controversy
and just quietly enjoy the resurgence in the company’s share price and
profits. But instead Aristocrat features in all the fishwrappers this
morning as a perfect example of remuneration stupidity and board
insecurity. Pick your version, Smage, Oz et al.

In
the process, the Aristocrat board also makes the case for the business
lobby lacking credibility when discussing such matters as a fair and
reasonable wage for the working class. They simply have no idea.

In brief, as the SMH’s first paragraphs report it:

Aristocrat shareholders will be asked to approve a pay rise
for the poker machine maker’s chief executive, Paul Oneile, that could
potentially double his remuneration to $5.1 million next year,
including $3.4 million worth of incentive payments.

The
announcement comes almost a year to the day after investors approved a
controversial incentive scheme worth $3.7 million to Mr Oneile at the
time it was approved.

Aristocrat has kicked on very
nicely under the steadying hand of Oneile. Other CEOs with less success
are overpaid as much. But the board’s insecurity is exposed in the body
copy. The Oz reports, “Aristocrat chairman David Simpson said
yesterday that the increases were made in consultation with an external
remuneration expert.”

And the SMH: “Aristocrat
chairman David Simpson acknowledged the sensitivity of the announcement
but said the increase was appropriate given the company’s increasing
size and complexity. We are absolutely concerned about it but … the
peer group of companies has changed rapidly with Aristocrat’s
fortunes,” he said.

It’s the usual story – a board incapable of
negotiating a CEO’s salary on behalf of shareholders ie. obtaining his
or her services at the lowest possible half-reasonable cost. Instead,
the responsibility is outsourced to consultants who do little more than
ensure CEO wage inflation is rampant.

Whatever vaguely similar
companies are paying their CEOs, the dumbo board will want to better.
It’s a joke and a rort for the fortunate few at the top. Aristocrat
should vote against it when given the chance.

So why should the
public take any notice of companies run on such a basis when it comes
to setting wages and conditions for the masses? It’s like taking
dietary advice from the grossly obese.

Peter Fray

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