Wham, smack, pow. The results of the Paperlinx annual general meeting would have made Batman blush. Last Friday, shareholders delivered a stunning rebuke to Amcor’s bumbling board, led by Melbourne Cricket Club president and former Amcor executive David Meiklejohn, who lavished millions of dollars on failed chief executive Tom Park, despite the company’s share price slumping 90% in recent years.
As Crikey explained earlier this month, since Park’s appointment in February 2004, Paperlinx’s market capitalisation has dropped by $2 billion. During that time, Park was paid $17.7 million, virtually all in cash.
Even this year, after a period of sustained under-performance, and with the company managing losing a further $225 million (on dwindling sales), Park was still paid a bonus, yes a bonus, of $962,967 (on top of his already generous base salary of $1.8 million). Park’s remuneration was equivalent to more than 10% of the company’s operating cash flows in 2010.
Paperlinx shareholders took out their frustrations on the board, with 68.1% of shareholders voting to reject the non-binding resolution on executive remuneration. This was the third biggest defeat of a remuneration resolution in Australian history, behind only the nearly collapsed Valad in 2008 and serial offender Novogen in 2006.
Paperlinx shareholders also delivered a rebuke to director Jim Hall, with 29% voting against his re-election. Hall was one of the directors who approved of Centro’s company destroying 2007 multibillion dollar acquisition of US shopping mall owner, New Plan Excel Realty. Hall is also on the board of struggling ASX companies Alesco and ConnectEast and is paid almost $700,000 a year for his multiple roles. One suspects that the only reason more shareholders didn’t vote against Hall’s re-election was for possible fear that no one else would want the job.
In a statement to the ASX, Meiklejohn said that “we hear our shareholders and their views on last year’s remuneration report and have been taking action. On a pro-forma basis, annualised group labour costs have now been reduced by around $10 million or over 50% as jobs have been removed or combined and pay scales adjusted”. One wonders why it has taken so long for this apparent “adjustment”, and why a CEO who has presided over a 90% fall in share price could receive any sort of bonus.
Leighton still doling it out: Australia’s most successful builder, Leighton Holdings, has long been exceedingly generous when it comes to remunerating departing CEO Wal King. But at least the overpaid King can lay claim to have being one of Australia’s most successful executives. Leighton’s lavish payments to CFO (and former Qantas executive) Peter Gregg appear even less defensible.
Gregg was appointed chief financial officer of Leighton on October 14 last year (he had previously been a non-executive director of the company since 2006 and was rejected for the top job at Qantas after Geoff Dixon’s departure). Despite being CFO for less than nine months, the Leighton board felt it appropriate to give Gregg a short-term, bonus payment of $2.2 million, this was on top of his base salary of $1.2 million and an inexplicable one-off payment of $550,000.
On an annualised basis, Gregg was paid $6.4 million — in 2009 only 25 ASX200 CEOs were paid more than that.
Fortunately for Gregg, he previously served on the Leighton board for three years, alongside the very directors who determined his remuneration.
Leighton shareholders meet on November 4 in Sydney to vote on the group’s remuneration arrangements.
Adam Schwab is the author of Pigs at the Trough: Lessons from Australia’s Decade of Corporate Creed (Wiley, 2010)