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How Paul Reynolds' pay stacks up against the competition
Chris Keall | Wednesday August 26 2009 - 05:00am
If you're a shareholder (or toey linesman) who sucked air through your teeth when you heard Telecom chief executive was the "$5 million man", his full compensation may start you grinding your molars.
For FY09 (the 12 months to June 30), Mr Reynolds earned:
- $1.75 million in base salary
- $3.06 million through a performance incentive scheme; the maximum possible (60% in cash, 40% in restricted shares, payable this August)
- $243,950 in “special costs”, including costs for relocating from the UK
- $2.1 million through a performance rights scheme (paid in the form of 668,790 Telecom shares, which will vest over the next three years)
All up, Dr Reynolds made a shade over $7 million (although that amount could ultimately be more, or less, depending on Telecom’s performance on the NZX over the next three years, given the parcel of 668,790 shares under the rights scheme component.)
Dr Reynolds’ compensation eclipses Telecom’s previous record, held by his predecessor Theresa Gattung with $5.4 million (including a $1.8 million exit package).
(Read Telecom's defence of its chief executive's compensation in "The bargain $5 million".)
Telecom recently reported a 43.9% in annual net profit after tax to $398 million on revenue that fell 2% to 2% to $5.587 billion.
Excluding one-of items, the result was in line with analysts’ expectations - although those expectations were informed, in part, by Telecom’s investor day briefing in Sydney on May 28.
The company is predicting another profit dip this year ahead of a pick-up in FY11.
Over at Fonterra, which has revenue four times that of Telecom, the co-operative’s annual reported listed its highest paid employee - presumably chief executive Andrew Ferrier - as earning a total of $3.98 million last year. Like Telecom, Fonterra has instituted a pay freeze.
Mr Ferrier has said he expects to take a pay cut this year, given the performance-related elements of this compensation.
Contact Energy made headlines when it briefly passed Telecom in market capitalisation on the NZX earlier this year. Its chief executive, David Baldwin, received a total of $1.5 million last year in salary and incentives. Contact recently announced that its annual profit had halved to $117 million on revenue that rose 19% to $2.2 billion.
Telecom’s executives and division heads also compare well in their own right to chief executives elsewhere in corporate New Zealand.
Sky TV’s FY08 annual report lists chief executive John Fellet’s total salary and bonuses as $1.1 million, for example. The pay TV provider recently reported FY09 revenue up 5% to $691.9 million from $658.8 million and a gross profit before tax of $125.8 million, down 12.7% on the previous year.
Compare that to Telecom’s top earners for FY09 (The table below is abbreviated. All bar Frank Mount also earned long term incentive payments of at least $243,000. UK ex-pat Russ Houlden also received $281,273 in travel and relocation payments; US ex-pat Frank Mount $97,742 and Alan Gourdie, who returned to NZ from the UK $41,785).
Neither TelstraClear nor Vodafone NZ list their chief executive’s salary in their companies office filings. Vodafone NZ chief executive Russell Stanners (who oversaw a $191.5 million net profit after tax on revenue of $1.5 billion in FY0
declined to detail any terms of his contract but said he indicated he was paid a lot less than $5 million. Mr Stanners also said his executive team was paid a lot less than Telecom’s. Vodafone NZ’s FY08 filing does show that the company paid out $5 million in share options, spread across an un-named number of employees.
Across the Tasman, Optus chief executive Paul O’Sullivan looks a bargain for shareholders, presiding over an $A8 billion turnover company (Telecom’s market cap is around $5 billion), but earning just $A2.7 million.
Ahead of the Vodafone Australia-Hutchison merger, which created a combined mobile operation with annual revenue of around $A4 billion, Hutchison chief executive Nigel Dews earned total annual compensation of $A1.3 million . On August 12, Hutchison (which was 10% owned by Telecom, whose stake was converted into a 5% holding in the merged company trading as Vodafone Australia) reported revenue up 19% to $A912 million for the first half, and net profit after tax of $A552 million, mostly fuelled by the one-off sale of its "3" mobile business ahead of theVodafone merger, which was completed June 9.
And Telstra’s new chief executive, ex-pat Kiwi David Thodey, has started on a $A2 million base salary, with potential total compensation of $A9.2 million in his first year if he hits all his bonus targets. Telstra recently reported a net profit after tax that rose 10.4% to $A4 billion on revenue of $A25.5 billion.
Chris Keall | Wednesday August 26 2009 - 05:00am
If you're a shareholder (or toey linesman) who sucked air through your teeth when you heard Telecom chief executive was the "$5 million man", his full compensation may start you grinding your molars.
For FY09 (the 12 months to June 30), Mr Reynolds earned:
- $1.75 million in base salary
- $3.06 million through a performance incentive scheme; the maximum possible (60% in cash, 40% in restricted shares, payable this August)
- $243,950 in “special costs”, including costs for relocating from the UK
- $2.1 million through a performance rights scheme (paid in the form of 668,790 Telecom shares, which will vest over the next three years)
All up, Dr Reynolds made a shade over $7 million (although that amount could ultimately be more, or less, depending on Telecom’s performance on the NZX over the next three years, given the parcel of 668,790 shares under the rights scheme component.)
Dr Reynolds’ compensation eclipses Telecom’s previous record, held by his predecessor Theresa Gattung with $5.4 million (including a $1.8 million exit package).
(Read Telecom's defence of its chief executive's compensation in "The bargain $5 million".)
Telecom recently reported a 43.9% in annual net profit after tax to $398 million on revenue that fell 2% to 2% to $5.587 billion.
Excluding one-of items, the result was in line with analysts’ expectations - although those expectations were informed, in part, by Telecom’s investor day briefing in Sydney on May 28.
The company is predicting another profit dip this year ahead of a pick-up in FY11.
Over at Fonterra, which has revenue four times that of Telecom, the co-operative’s annual reported listed its highest paid employee - presumably chief executive Andrew Ferrier - as earning a total of $3.98 million last year. Like Telecom, Fonterra has instituted a pay freeze.
Mr Ferrier has said he expects to take a pay cut this year, given the performance-related elements of this compensation.
Contact Energy made headlines when it briefly passed Telecom in market capitalisation on the NZX earlier this year. Its chief executive, David Baldwin, received a total of $1.5 million last year in salary and incentives. Contact recently announced that its annual profit had halved to $117 million on revenue that rose 19% to $2.2 billion.
Telecom’s executives and division heads also compare well in their own right to chief executives elsewhere in corporate New Zealand.
Sky TV’s FY08 annual report lists chief executive John Fellet’s total salary and bonuses as $1.1 million, for example. The pay TV provider recently reported FY09 revenue up 5% to $691.9 million from $658.8 million and a gross profit before tax of $125.8 million, down 12.7% on the previous year.
Compare that to Telecom’s top earners for FY09 (The table below is abbreviated. All bar Frank Mount also earned long term incentive payments of at least $243,000. UK ex-pat Russ Houlden also received $281,273 in travel and relocation payments; US ex-pat Frank Mount $97,742 and Alan Gourdie, who returned to NZ from the UK $41,785).
Neither TelstraClear nor Vodafone NZ list their chief executive’s salary in their companies office filings. Vodafone NZ chief executive Russell Stanners (who oversaw a $191.5 million net profit after tax on revenue of $1.5 billion in FY0
declined to detail any terms of his contract but said he indicated he was paid a lot less than $5 million. Mr Stanners also said his executive team was paid a lot less than Telecom’s. Vodafone NZ’s FY08 filing does show that the company paid out $5 million in share options, spread across an un-named number of employees.Across the Tasman, Optus chief executive Paul O’Sullivan looks a bargain for shareholders, presiding over an $A8 billion turnover company (Telecom’s market cap is around $5 billion), but earning just $A2.7 million.
Ahead of the Vodafone Australia-Hutchison merger, which created a combined mobile operation with annual revenue of around $A4 billion, Hutchison chief executive Nigel Dews earned total annual compensation of $A1.3 million . On August 12, Hutchison (which was 10% owned by Telecom, whose stake was converted into a 5% holding in the merged company trading as Vodafone Australia) reported revenue up 19% to $A912 million for the first half, and net profit after tax of $A552 million, mostly fuelled by the one-off sale of its "3" mobile business ahead of theVodafone merger, which was completed June 9.
And Telstra’s new chief executive, ex-pat Kiwi David Thodey, has started on a $A2 million base salary, with potential total compensation of $A9.2 million in his first year if he hits all his bonus targets. Telstra recently reported a net profit after tax that rose 10.4% to $A4 billion on revenue of $A25.5 billion.
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