Bosses' pay increases raise a stink

Fairfax Media

PAY HIKE: The bosses of Contact Energy and Skellerup Holdings have been rewarded with big pay rises, even though both firms' profits fell substantially.

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The bosses of Contact Energy and Skellerup Holdings have been rewarded with big pay rises, even though both firms' profits fell substantially.

Contact's managing director David Baldwin made an extra $117,000, bringing his total package to $1.6 million, despite a 50 per cent fall in company profit.

Contact's share price has slumped from a peak of almost $9.75 early last year to just under $6 yesterday.

And Skellerup's executive director Donald Stewart received a pay packet of $801,000 in the 2009 year, compared with $509,000 the year before.

Mr Stewart's pay rise came as Skellerup's net profit fell 37 per cent due to lower demand and customers building up inventory. Skellerup's chairman Sir Selwyn Cushing was unable to be contacted for comment.

Shareholders Association chairman Bruce Sheppard said simply of the pay rises that "both stink".

Other chief executive pay rises recently include The Warehouse's Ian Morrice who got a 76 per cent rise to $3.8m, and Telecom's chief executive Paul Reynolds who was paid $5.4m, even though company profits plunged 44 per cent.

Executive pay is becoming an international issue, with the Australian Shareholders Association calling for closer scrutiny of exiting executive salaries and G20 nations arguing about how to limit bankers' bonuses.

Australian shareholders were outraged recently by hefty payments to departing chief executives of Qantas and Boral. Former Qantas Airways chief executive Geoff Dixon received A$10.7m (NZ$12.9m) for nine months work, four as a consultant, while Boral chief executive Rod Pearse will receive a A$4.04m end of service payment next month after 10 years at the helm. His total remuneration will be A$11.51m, up from A$6.66m the previous year.

Meanwhile, Europe and the US are at odds as to how strictly to link bankers' pay with long-term performance.

The issue of bonuses is expected to be one of the toughest on the agenda at the G20 meeting in Pittsburgh this week.

The Financial Stability Board, an international body of finance officials and central bankers which advises the G20, wants to tie bonus pools to the amount of capital banks have to set aside. But the US and Britain fear regulation might scare away talent.

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