CEO's salary rises despite Fairfax struggles

CHRIS ZAPPONE
Last updated 16:48 03/10/2012

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Pay for Fairfax chief executive Greg Hywood rose last year despite the hard times at the company.

Hywood received A$2.36 million ($2.93 million)) in base salary, cash bonuses and shares in 2012, with the potential to earn another A$646,000 in share grants should performance hurdles be met.

He earned a fixed A$1.55m in base salary with A$48,000 in superannuation and other benefits in 2012, unchanged from last year, along with a performance bonus of A$420,000.

Yet the A$420,000 is half of what he was entitled to under the Fairfax's compensation scheme, with Hywood volunteering to forgo half of the total "given the difficult trading environment".

Shares in the company, publisher of this website, have been in freefall in recent months, plunging from 96 Australian cents in October 28, 2011, to a record low of A39.5c this morning. The company is facing a mix of challenges, including a collapse in advertising revenue and a structural shift by consumers away from print newspapers.

Despite the hard times for Fairfax and the media industry broadly, Hywood's total compensation has increased. Last year he earned a total of A$1.52m including shares, the Fairfax annual report showed. The increase in his pay reflects Hywood's status as a permanent appointment. He was appointed as permanent chief executive in February 2011, and had been acting managing director from December 2010. 

In response to the worsening conditions this year Fairfax paid Hywood only "those elements related to cost reduction targets" achieved through the year.

Under the company's long-term equity-based incentive scheme, Hywood was awarded 943,063 shares which vest after three years based half on the outcome of Fairfax's total shareholder return and half on the stock's compound annual growth rate.

Fairfax said it achieved a run rate of savings worth A$56m in the year to June 2012, linked to the Fairfax of the Future transformation programme, which included the closure of some production and print functions in Australia and New Zealand, a restructure of support services, including human resources and IT and the outsourcing of some sub-editing.

The programme also improved the yield on subscriptions for The Sydney Morning Herald and The Age, while cutting unprofitable circulation channels for the two metro newspapers. Chairman Roger Corbett received a base salary of A$397,000 in 2012, with an additional A$35,730 in superannuation in 2012, up from a total of A$412,629 in the previous year.

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In addition to Hywood's voluntary reduction of his cash bonus, Fairfax outlined a list of other measures to address executive pay in a time of falling profits.

The company said there would be no increase in directors' fees in 2013 and fixed pay for directors earning A$150,000 or more had been frozen until 2013, unless a union contract stipulated differently.

Rights had been substituted for share allocations in the company's long term incentive plan, Fairfax said. Also after 2013, the company will scrap a retest of performance hurdles conducted in the fourth year if vesting criteria aren't met within three years.

- Sydney Morning Herald

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