'Corporate Paradise' — Where Your Credit Card Can Know No Bounds' — by Doug Conway & Kylie Walker The Gold Coast Bulletin 26/12/2002
IN corporate paradise, company credit cards come without spending controls. Bosses can have one for themselves, one for the wife and another for the kids. They enjoy interest-free home loans of up to $400,000 that may or may not be repaid. They are given $10,000 watches and a $1.1 million Christmas party, limos all round, to lighten a year when they lose $2.1 million.
An executive living in his own apartment collects rent from the company. The top dog enjoys a marble and gold bathroom, including spa, in his office. He spends $9000 on restaurant meals in one month, $2000 of that in tips. His wife racks up $50,000 worth of first-class air travel a year.
In this business paradise, the head honcho's personal assistant lives on the Gold Coast but he flies her to Sydney for the working week and puts her up a the Intercontinental hotel. The annual cost: $63,000, but who's counting? He gives an old mate $486,000 of company money as an interest-free, unsecured loan. After seven years without a single repayment, the friend also receives a $1600 box of cigars.
At HIH, none of this was a dream. It was all reality. Nine months before the company's $5.3 billion collapse, the biggest in Australian history, senior executives awarded themselves a total of $4.3 million in bonuses.
The picture painted at the HIH royal commission this year shows that in Australia not only is greed still good, it is splendiferous. Executives receive bonuses for coming, bonuses for going and, in between, bonuses for staying.
The Commonwealth Bank's David Murray was paid $7 million this year, including a $4.65 million 'golden handcuff' for clocking up 10 years of service.
During his decade of tenure, the bank closed 870 branches and axed 17,000 jobs, according to the Financial Sector Union.
The big four banks continue to report multibillion-dollar annual profits. Mr Murray's latest was $2.66 billion.
But workers question the dizzying rewards that are dished out at the upper echelons. So does the Federal Government, though it is powerless to stop it.
"People deserve a fair day's pay for a fair day's work, but it appears that chief executives are getting infinitely more than a fair day's pay," said Employment Minister Tony Abbott.
Westpac's David Morgan enjoyed a $1 million increase in pay to $3.58 million, albeit in a year of record $2.19 billion annual profits. ANZ's John McFarlane actually took a pay cut this year, in line with a profit fall. His $200,000 decrease was 10 times the average wage, but he still pocketed $2.89 million, or 144 times the average wage.
Frank Cicutto, of NAB, dropped a similar amount, $300,000, a reflection of the $4 billion HomeSide disaster. However, he still struggled by on $2.62 million. Wal King, of construction firm Leighton Holdings, fared even better than the bankers with $4.14 million.
Former BHP Billiton chief executive officer Paul Anderson pocketed $18.4 million in his last year as head of the world's biggest mining company after receiving$9.4 million in retirement benefits. Mr Anderson promptly called for a halt to spiralling salaries (a bit rich, that) and blamed the media for treating chief executives as sports stars.
Coles Myer chief executive John Fletcher received a $7.7 million golden handshake from his previous employer, Brambles Industries. The Brambles report also shows Mr Fletcher pocketed $886,000 for a single month's work last year.
AMP paid a reported $7 million to sever ties with Paul Batchelor, but at least that was little more than half of the $13 million it cost to settle with his predecessor George Trumbull in 1999.
Politicians lose their seats and workers lose their jobs, however unsuccessful CEOs, it seems, receive large payouts.
"Boards might want the CEO to leave quietly," said the National Competition Council's president, Graeme Samuel. "But it's the board's lack of diligence or incompetence in drafting the CEO's contract that allows this to happen."
The last word on corporate excess belongs to One.Tel, which paid joint managing directors Jodee Rich and Brad Keeling $7 million each in performance bonuses before its spectacular collapse. The Packers, major shareholders, were not happy, as Rodney Adler recalled at this year's liquidator's hearing when he recounted this terse exchange.
James Packer: "Pay it back." — Jodee Rich: "I don't think I will."
N.B. Around $2 million dollars is (circa 2003) a lifetime's earnings for the ordinary citizen.