Leighton's $30m man
THE long-serving former chief executive of Leighton Holdings, Wal King, will receive a severance package that could rise to $30 million, the company revealed in its annual report.
THE long-serving former chief executive of Leighton Holdings, Wal King, will receive a severance package that could rise to $30 million, the company revealed in its annual report.Consistently one of the best-paid executives before his retirement, Mr King's "golden handshake" is one of the biggest in Australian corporate history, raising concerns from investors and corporate governance experts particularly in light of the company's disastrous financial performance this year."It's safe to say that it's probably an excessive amount of money," a partner at Arnhem Investment Management, Theo Maas, said.A director at CGI Glass Lewis, Aaron Bertinetti, said the proxy adviser has had "concerns" with Mr King's pay for "a number of years"."You've got a very large number and with any company you need to justify the rationale for those numbers," Mr Bertinetti said."And we've never held the view that Leighton have effectively justified the pay level of Wal King."Mr King was paid a $12.6 million fixed retirement benefit on top of statutory leave entitlements. He will also be paid $4.9 million over a three-year restraint period, despite already being locked in to a $6 million consultancy arrangement over the same period.Mr King was also paid $2.75 million for his final six months at the company, but like most other senior executives did not receive a performance bonus this year due to the company's poor profit result.Mr King is also understood to be demanding payment of a further $5 million bonus for a "satisfactory transition" to his successor, David Stewart, as set out in his contract.Leighton declined to comment, instead pointing to the annual report, which said the bonus had not been awarded "at the date of this report". Mr Stewart was replaced suddenly last month by Hamish Tyrwhitt after only eight months in the job.Details of Mr Stewart's termination package will be revealed next week.Mr King received a rousing send-off from shareholders and colleagues when he stepped down at the start of the year, having expanded the company from a medium-sized contractor to Australia's largest construction firm in 23 years at the helm.But things have quickly turned sour for the company after a string of profit downgrades since April. Cost blow-outs and delays at the company's Wonthaggi desalination plant and Brisbane Airport Link projects, as well as its troubled Middle East joint venture, saw the company pitch to a $400 million loss last year. All projects were entered into under Mr King's watch.Mr King picked up $14.7 million in his final full year of work last year, which included a $7.6 million bonus.Mr Bertinetti said executive bonuses should encourage good governance and not reward risk-taking behaviour. As well, bonuses should contain "claw-back" provisions, "so that decisions you make today don't lead to massive mistakes tomorrow that somebody else has to clean up and obviously that's what we're looking at here [with Leighton]," Mr Bertinetti said.