Perhaps the most interesting exchange at the Axa Asia Pacific AGM
yesterday was over the retirement pay for long-serving chairman Rick
Allert. There are barely any director retirement schemes still running for new
non-executive directors who join a top board these days as the
corporate governance debate has concluded that NEDs should receive all
their fees up-front in cash or shares.

The lump sum retirement payouts which rise with years of service
have been condemned as acting like a good behaviour bond and stopping
directors from resigning over matters of principle and encouraging them to hang around too long.

However, there were quite a few schemes that were grandfathered rather
than closed for everyone, so long serving directors are still notching
up big benefits.

Rick Allert is enjoying what will probably finish up as the biggest
in history because the Axa
retirement scheme gives a director five times their final annual
fee salary after 15 years of service. The only competition will come
from long-serving ANZ and Woodside Petroleum chairman Charlie Goode.

Allert has served for 14 years and his pay last year totalled a rather
healthy $505,000, comprising a base fee of $290,460, $26,141 in standard 9% super and retirement
benefits of $188,440.

Allert was re-elected for another three years yesterday and he
to “serve a full term”, which means he’ll probably retire in 2009 at
the age of 66 after 17 years on the board, the last nine as chairman.
However, once he’s past 15 years of service, he’ll no longer be
entitled to any additional retirement benefits and that’s where
yesterday’s resolution to increase the maximum NED pay from $1.2
million to $1.6 million gets interesting.

Having received $505,000 in 2005, will the AXA board give Rick a big
increase in base pay once the retirement dollars stop appearing in the
annual report in 2007? There’s certainly plenty of head room now but Allert did pledge
yesterday that the company wasn’t planning increases over or above the
average pay rise afforded to Australian NEDs.

I told yesterday’s AGM that Allert’s retirement payout
would soar from $1.5 million to a record $2.5 million if the board
decided to increase his base
pay from $300,000 to $500,000 and this issue would be closely watched over the next three years.

No company would allow an employee to get a sudden lift in final salary just
to maximise a retirement benefit, so it will be interesting to watch
what happens when it is the chairman of the company who stands to
benefit from such a move.

Here’s a list of some of the biggest retirement payouts for non-executive chairs over the years:

Stan Wallis:

entitled to $1.6 million from AMP after 17 years of service but declined to accept it in the end.
Mark Rayner: the NAB chairman collected a lump sum of $1.46
million in 2001
after 16 years on the board.
Ian Burgess: ousted as AMP chairman in 2000 but
the pain was softened with a $1.07 million retirement payout after 11 years on the board.
John Dahlsen: nine years on the Woolworths board, the last four as chairman, generated a payout of $1.04 million.
Stuart Hornery: collected $992,435 in November 2000 when
he retired as non-executive chairman of Lend Lease.