The CEO pay debacle continues to grow, with The Sunday Age producing a neat feature outlining how CEO pay has far exceeded CEO performance in recent years. The article noted that “among the top ten earners, six of the companies underperformed the index over the past three-year period (Brambles, Woolworths, Westfield, Leighton, Westpac and ANZ), while CEO pay jumped 10-156%.”

The full list (which only included CEOs, as otherwise it would have been dominated by Macquarie and Babcock executives) was:



2006 remuneration

Change in remuneration over the last three years

TSR over the last three years

Allan Moss


$18.5 million



Frank Lowy


$13.2 million



Wal King


$12.8 million



Leigh Clifford

Rio Tinto

$8.6 million



Roger Corbett


$8.4 million



David Morgan


$7.4 million



John McFarlane


$7.2 million



David Turner


$7.1 million


Down 7%

Greg Clarke

Lend Lease

$6.5 million

Not stated

Not stated

Chip Goodyear


$6.4 million



While easily the biggest earner, at least Allan Moss can lay claim to steering Macquarie from a company worth less than $1 billion, to Australia’s largest home grown investment bank and a true global competitor valued by the market at more than $17 billion. However, as noted in Crikey earlier this year, Moss’s pay is very high, even when compared with other very well paid investment bankers.

Similarly, Frank Lowy can point to an unparalleled record of growth at Westfield since the early 1960s when he opened his first delicatessen in Blacktown with the late John Saunders. Given that Frank donates a fair chunk of his salary to charity anyway, for the sake of good corporate governance, he should probably take the Packer route and stop paying himself a salary.

Except for the Spencer Street debacle, Wal King has done a fine job at the helm of Leighton for 20 years, taking its share price from $2 in 1995 to around $20 today. Profit increased again this year by 28%. The market continues to love the Leighton story, pricing it on a hefty PE of 19. While expensive at $12 million, King hasn’t been terrible value for money for Leighton shareholders, so long as he can keep profits increasing at their historical rate.

Woolworths’s Roger Corbett has seen his earnings skyrocket in recent years, up 156% to $8.4 million, despite TSR being up only by 35% during that same period. In fairness to Corbett, he has performed very well in his decade or so at the top, smashing Coles Myer and lifting Woolworths’s share price from around $4 to $20 in the last eight years. Not too many WOW shareholders would begrudge Roger for collecting more than $8 million last year.

David Morgan and John McFarlane both copped significant pay rises in the last few years, earning around $7 million each. While TSR has improved at both Westpac and ANZ, given the earnings boost achieved from skyrocketing bank fees and a booming economy, a trained donkey could probably have lifted TSR at the banks. Both are overpaid CEOs operating in a cozy oligopoly while Australians pay the highest bank fees in the world.

Leigh Clifford and Chip Goodyear are paid $8.6 million and $6.4 million respectively to manage our global, dual-listed miners. TSRs at both RIO and BHP have been phenomenal over the past few years, but that has been predominantly due to the China-fuelled commodities boom. Given neither CEO has created any real wealth for shareholders (the share price increases have come from investments made by predecessors) at the moment, both are being overpaid. Clifford more so than Goodyear, as he erred badly in not bidding for WMC which, in light of the skyrocketing uranium, gold and copper prices, would have been a wise acquisition.

At first glance, Brambles’s David Turner looks like the most overpaid executive on the list, collecting a very handy $7 million despite presiding over a decrease in TSR over the past three years. However, in fairness to Turner, he has completed a remarkable turnaround job at Brambles, selling its Cleanaway businesses to a private equity consortium for US$3.6 billion and increasing the share price from $4 in 2003 to around $12.75 now. That being said, Turner was CFO of Brambles between 2001 and 2003 when its share price dropped from $13 to $4 after the company somehow managed to lose 15 million pallets. While the recovery at Brambles has been a relief for long-suffering shareholders, paying Turner $7 million to fix a mess that he in part created is a bit rich.

Lend Lease’s Greg Clarke took home the not inconsiderable sum of $6.5 million last year. Clarke was appointed CEO back in December 2002 and since then, Lend Lease has performed well, rising from around $8 to $16. However, Lend Lease shareholders would be scratching their heads as to why Clarke’ remuneration increasing from $3.5 million last year to more than $6.5 million this year despite Lend Lease’s operating earnings only increasing by 24%.

And where does Crikey’s favorite, Telstra boss Sol Trujillo, fit in? The Sunday Age claimed that Sol was “a pauper compared with some of the country’s other imported and home-grown chief executives”. That is not quite correct – Sol’s $8.7 million would have placed him fourth on the list (he wasn’t included because he hasn’t been in the job long enough), despite Telstra’s share price dropping by almost 29% during Sol’s time at the top. Looks like Sol has claimed the crown of Australia’s Most Overpaid Executive from fellow yank, Dawn Robertson, who is ineligible for the title as she has since departed Coles Myer head office.

Peter Fray

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