It was a rare moments of bipartisan consensus. Australia’s Prime Minister Turnbull declared the $5.6m pay packet of Ahmed Fahour, then-CEO of Australia Post, too high. Hardly surprising, since no vote-seeking politician would argue any public servant is worth this much. And when the country’s postage delivery service had decreased in frequency and skyrocketed in price under Fahour’s watch, it seemed all the more incredulous.
Media interest in the post chief’s package was intense. Analysis by Chris Uhlmann suggested Fahour was not just the highest paid man in the Commonwealth’s service, he appeared to be the highest paid postal executive on the planet.
And he’s in good company: last year the top 8 senior executives of Australia Post took home a combined $13.7m, with the top 5 earning more than $1.25m each.
Out of touch? Or fair pay for a fair day’s work?
Perhaps the lack of transparency around Fahour’s salary was as unbelievable as the quantum alone. You see, the Board of our Australia Post decided in its wisdom to expunge all details of executive remuneration from last year’s annual report.
This followed a furore that erupted the prior year over Fahour’s pay packet (and resulted in him donating his $2million “bonus” to a charity run by his brother).
So rather than address the source of the problem, it seems the Board decided to simply erase all reference to his salary from the public record. Backspace. Zippo. Gone.
The fact that it took a Senate committee to extract details of Fahour’s actual pay says a lot about the state of financial reporting in Australia, as well as the culture of Australia Post’s Board. For the record, Chairman John Stanhope later admitted that “his board made a mistake by not disclosing publicly a breakdown of the salaries it pays senior management”. Ummm. Yes. Big mistake.
It’s been argued that Fahour’s background in the banking sector set him up for the big bucks at Australia Post. But at ten-times the Prime Minister’s salary, this public servant paypacket was clearly out of whack with taxpayer expectations.
By contrast, listed company CEO salaries are generally readily accessible and have been so stratospheric for as long as I can remember that shareholders now have the right to record “strikes” against the remuneration reports of listed companies. Record two strikes and there is the potential to spill the board. This seems to have finally provided a mechanism for shareholders to have a say against unacceptable pay-for-performance. (Interestingly the Commonwealth Bank was the first big four bank to have a first strike recorded last year and this has been credited for the “tough stance” taken in the fallout of the latest compliance scandals there. We shall see!)
But what about the not for profit sector? Try googling what leaders of the big charities in Australia get paid and you’ll struggle to come up with much. Why the secrecy when these organisations exist purely through the trust and generosity of their supporters?
The same could be said for not-for-profit membership associations, though in recent times member demands have lifted the lid on secret pay day deals. These organisations operate in a context far removed from any commercial imperative; so would you expect that to be reflected in executive remuneration expectations?
At first pass it seems there are very generous packages on offer in this sector, given that that:
- The now-terminated CEO of accounting membership association CPA Australia was paid $1.8m in 2016.
- The incoming CEO of competitor membership association Chartered Accountants Australia and New Zealand is earning $750,000 plus potential bonus of up to 33%, (meaning Mr Ellis can earn just shy of $1 million).
- The incoming CEO of membership body Australian Institute of Company Directors is earning $525,000 (including superannuation) plus potential bonus of up to 40% (meaning Mr Armour can earn up to $735,000)
Fair game or fairly gamed?
Before you form an opinion, consider this:
- Full-time earnings in Australia currently average A$80,236 per annum; or $83,616 if overtime and bonuses are included.
- Salaries for degree-qualified Australian public school teachers begin at $66k and the highest paid principals responsible for the largest schools in the system earn up to $160k. For shaping future generations.
- Salaries for degree-qualified registered nurses in public hospitals start at $60k and the highest paid surgeon in an Australian public hospital gets paid $240k per annum. For saving lives.
- The Prime Minister of Australia earns a salary of $522k. For steering the country.
So what are your expectations of executive salaries? In your industry? Or in other sectors you support? Do they inspire you or ire you? Or send you completely postal?
Very interested to hear from you.