Perhaps no one at the Financial Review noticed the irony. This morning, Australia’s best financial rag pointed out that Telstra is imposing a pay freeze on workers employed under workplace agreements as part of its “rebuilding plan”. The following page, the AFR pointed out that fixed pay for senior executives in the ASX100 rose by 3.7% last year — the 10th year in a row where CEO base pay increased.
Telstra stated that about 6000 employees would be affected by the pay freeze, including those covered by AWAs and new staff. The freeze also affects Telstra boss David Thodey, whose fixed pay will not rise next year. Fortunately for Thodey, his “fixed” pay rose by 15% last year, from $2 million to $2.3 million. This also had the flow-on effect of increasing Thodey’s short-term bonus potential next year is $4.6 million.
Telstra, of course, were also more than happy to pay its former management team millions of dollars in cash — led by Sol Trujillo who collected $33 million in cash (and more in shares) for his ill-fated four-year tenure at Telstra. Trujillo’s good friend, Greg Wynn, who was Telstra’s chief operating officer (and largely responsible for the company’s bungled IT overhaul) was paid tens of millions of dollars in cash (including $11.7 million in 2007) and also received a lucrative cash consultancy after his resignation.
Telstra, however, is far from the worst offender when it comes to executive largesse for non-performance. That honour belongs to perennially struggling rail and ports company, Asciano. Even after the highly respected Malcolm Broomhead took over the chairmanship from Tim Poole, Asciano has continued to pay CEO Mark Rowsthorn millions of dollars in bonuses as the company wallows in red ink.
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This year, Asciano gave its usual salute to shareholders when it awarded Rowsthorn a 37% pay rise to $3.98 million, including a doubling his cash bonus to $2 million. This may not have been quite so offensive to shareholders had Asciano not last year reported a loss of $976 million, based primarily on impairments of $1.14 billion. (Rowsthorn also received a $1.3 million cash bonus in 2008 despite Asicano losing more than $100 million on an ill-fated frolic on the Brambles share register).
Australian remuneration committees continue to make Orwell proud — for it very much still appears that some employees appear far more equal than others.
Adam Schwab is the author of Pigs at the Trough: Lessons from Australia’s Decade of Corporate Greed.