Pay cut for Woolies CEO

Grant O'Brien has started as chief executive (CEO) of Woolworths, Australia’s largest supermarket chain. The article notes he was a 24-year Woolworths veteran and former chief operating officer of the Australian food and petrol division when he took the job.

Grant O'Brien will be paid a fixed annual salary of $1.9 million, which includes base pay, superannuation and the provision of a car. His total pay can increase if he earns short-term and long-term incentives.

The article says O'Brien's $1.9 million fixed pay is about a third of last year’s payout to his predecessor, Michael Luscombe. For context, in 2010–11 Luscombe’s remuneration included a fixed wage of $2.259 million and short-term cash bonuses of $2.552 million.

Yes, performance-based incentives could see O'Brien match his predecessor’s package. His short-term and long-term incentive plans are capped at 100% of his total remuneration, with actual payments determined by corporate and financial performance measures.

O'Brien’s package comprises a fixed annual salary (base pay, superannuation and a car) plus short-term and long-term incentive plans. The incentive plans are performance-based and capped at 100% of his total remuneration.

Bonus pay fell because the share-based payments component of executive salaries declined. The article attributes this to adverse market conditions and lower net profit growth.

The article notes a poor trading environment for retailers and a warning from Luscombe that Woolworths’ earnings may grow as little as 2% this financial year due to weak trading conditions, hardware joint-venture startup costs and a lack of sizeable acquisitions. Those factors could constrain the CEO’s ability to earn performance-based incentives.

According to the article, O'Brien’s total remuneration was $1.66 million in 2009–10 and rose to $2.044 million the following year.