Advisers oppose Transfield chief's pay
The high pay of Transfield Services' chief executive has run into criticism from advisory companies to institutional investors, with one of the companies telling clients to oppose plans to award him a swag of shares.
Proxy adviser ISS has told clients plans by Transfield to award the chief executive, Graham Hunt, a "success fee" has no rationale, and should be opposed.
The matter is to be considered by shareholders at the company's annual meeting later this week.
When Mr Hunt was appointed early this year, he was awarded the right to be granted up to 840,700 shares in respect of the financial year to June 30, a further $1.5 million of shares for fiscal 2014 and a deferred success fee of up to another 235,900 shares.
ISS told clients the "success fee" is not appropriate given the company's continued poor performance in fiscal 2013.
As well, shareholders have not been given sufficient information on specific performance targets to justify the payment, and the value of the award is "not consistent with market cap peers".
In the year to June, Mr Hunt received a total remuneration of $1.86 million, which includes $420,750 in short-term incentives, being part of the package of shares to be voted on at the meeting.
Another investor adviser, CGI Glass Lewis, has told clients Mr Hunt's fixed pay of $1.5 million is "approximately 46 per cent higher than the median for total fixed remuneration of the company's index cap peers in financial year 2013".
It said it "views high fixed remuneration with scepticism, as such remuneration is not directly linked to performance and may serve as a crutch when performance has fallen below expectations".
"In our view the large incentive-based pay is largely the result of high fixed remuneration as it has a compounding effect on the amount of short and long-term incentives granted to an executive, since such awards are granted as a fixed percentage of fixed remuneration."
Transfield has failed to "provide a thorough and convincing explanation for such high fixed remuneration", it told clients.
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