Fat cat bosses paid top dollar to walk | Business | News.com.au
IT'S enough to make honest shareholders sick. The average CEO of a top 100 Australian company received just over $3.4 million as a termination payment when they left their firm, according to research company RiskMetrics.
And in just two of the 33 cases studied did the company seek shareholder approval for the massive payouts, despite the Corporations Act technically requiring approval for termination payments above a threshold of seven times total remuneration.
One of them, OZ Minerals, paid $8.35 million to departing CEO Owen Hegarty despite shareholders rejecting a payment of $10.67 million at an AGM in July.
Of the 33 CEOs included in the sample, only five received no termination payments, despite 12 of them retiring.
More than two-thirds of the CEOs (23) received payments of more than $1 million.
Director of RiskMetrics Australia Dean Paatsch said the research showed how urgently the Corporations Act needed to be reformed so that shareholders were given the power to limit excessive termination payments, especially as shareholders rarely if ever derive any benefit from the payments.
"At the moment shareholders are effectively powerless to prevent huge payments to departing CEOs because the existing provisions of the Corporations Act are riddled with loopholes that any decent lawyer can get through," Mr Paatsch said.
The largest termination payment included in the sample was the $16.8 million paid to former Santos CEO John Ellice-Flint. The bulk of this was due to the Santos board allowing 2.313 million unvested options to vest on Mr Ellice-Flint's departure (and the calculation of the payments assumes the options were exercised on the date his termination benefits were announced).
No comments:
Post a Comment