New chief at Woolies to be paid $1.9m

GRANT O'BRIEN will begin his job as chief executive of Woolworths on a salary of $1.9 million.

By InvestSMART · 12 Oct 2011

By InvestSMART ·
12 Oct 2011

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GRANT O'BRIEN will begin his job as chief executive of Woolworths on a salary of $1.9 million.

The salary is just a third of the pay-out that his predecessor, Michael Luscombe, was paid last year but performance-based incentives mean he could quickly match his former boss's package.

Details of Mr O'Brien's fixed remuneration, short- and long-term incentive plans were released yesterday, his 10th day in the top job.

His salary of $1.9 million includes base pay, superannuation and a car.

In 2010-11, Mr Luscombe's remuneration was made up of a fixed wage of $2.259 million and short-term cash bonuses of $2.552 million.

Bonus pay for many Woolworths executives fell last year due to a decline in the share-based payments component of their salaries as a result of weak market conditions and lower profit growth.

Mr O'Brien's short- and long-term incentive plans are capped at 100 per cent of his total remuneration, the final payment to be determined by corporate and financial performance measures.

But his ability to earn those incentives will be made all the harder by the poor trading environment and tough competition between retailers with heavily slashed prices and promotions.

Last month Mr Luscombe warned that company earnings would grow as little as 2 per cent this financial year, Woolworths' slowest in more than a decade, because of the weak trading conditions.

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Frequently Asked Questions about this Article…

What is Woolworths CEO Grant O'Brien's starting salary?

Grant O'Brien will start as chief executive of Woolworths on a salary of $1.9 million, which includes base pay, superannuation and a car.

Can Grant O'Brien earn more than his $1.9 million base pay through bonuses and incentives?

Yes. His short- and long-term incentive plans are capped at 100% of his total remuneration, meaning performance-based pay could substantially increase his overall package depending on corporate and financial performance measures.

How does Grant O'Brien's pay compare to former CEO Michael Luscombe's remuneration?

O'Brien's $1.9 million salary is about one-third of the pay-out his predecessor Michael Luscombe received last year. In 2010–11 Luscombe's remuneration included a fixed wage of $2.259 million and short-term cash bonuses of $2.552 million.

What determines whether O'Brien receives his short‑ and long‑term incentive payments?

The final payment under O'Brien's incentive plans is determined by corporate and financial performance measures, as set out in his remuneration arrangements.

Have Woolworths executives' bonuses been affected by market conditions?

Yes. Bonus pay for many Woolworths executives fell last year due to a decline in the share-based payments component of their salaries, which the company attributed to weak market conditions and lower profit growth.

What industry conditions could make it harder for the new Woolworths CEO to earn incentives?

The article notes a poor trading environment and tough competition among retailers — including heavily slashed prices and promotions — which could make it harder for O'Brien to hit the performance targets that unlock incentive pay.

When were details of Grant O'Brien's pay and incentive plans released?

Details of Grant O'Brien's fixed remuneration and his short‑ and long‑term incentive plans were released on his 10th day in the top job.

What did Michael Luscombe say about Woolworths' expected earnings growth?

Michael Luscombe warned that company earnings would grow by as little as 2% in that financial year — the slowest growth in more than a decade — citing weak trading conditions.