richard goyder, gives himself a pay cut

Andrew Main | May 23, 2009
Article from: The Australian

THE board of Perth-based giant Wesfarmers has frozen salaries and cut annual bonuses in a way that could reduce chief executive Richard Goyder's pay by $1.5 million a year, experts say.

In a letter he sent out yesterday to the workforce of about 200,000, which now includes Coles, Target and KMart, Mr Goyder said the move was "a responsible one given the current economic climate".

Directors' fees have also been frozen at 2008 levels.

The $1.5 million bonus reduction would occur in the hypothetical situation of Mr Goyder passing all the performance hurdles in his executive contract.

Mr Goyder was awarded a 5 per cent increase in his base salary in October to $3.15 million, not least because the company grew by 60 per cent when it acquired Coles.

His bonuses would have increased that but, as he said, the company would not be paying the individual discretionary element of the executives' annual bonuses this year.

The bonus cut will also apply to the managing directors of the group's nine divisions, and several other senior executives at head office.

The nine-person board, now chaired by Bob Every, enjoys total annual fees of more than $2million, with an average payout of about $170,000.

Mr Goyder also took the opportunity to take a swipe at the federal Government's controversial budget decision to crack down on employee share schemes, which was aimed at complex executive remuneration schemes but has accidentally rendered the much more common qualifying share schemes uneconomic.

"I am very disappointed with the Government's position on employee share schemes," he said, noting that his company had put on hold loans for its employee share plans "until there is greater clarity on what these changes mean for the schemes and our employees". He said the Government's decision was unexpected, adding: "These times are challenging enough for many of our valued employees". "We will ensure we make strong representations on this issue to the Government."

Wesfarmers is one of the biggest non-government employers in Australia, with a workforce that grew from about 40,000 before the Coles acquisition to more than 200,000 now.

Many of those are part-timers and the company had been anticipating offering access to the scheme to about 110,000 employees overall.

Shareholders voted down the company's remuneration report at its annual general meeting in November but like all such votes it was non-binding.

Shares in Wesfarmers closed yesterday 56c lower at $20.81.