Pay cut for Woolies CEO

GRANT O'Brien starts his job as the chief executive of Australia's largest supermarket chain, Woolworths, on a salary of $1.9 million, a third of last year's payout to his predecessor, Michael Luscombe.

But performance-based incentives could see him match his former boss's remuneration package.

Details of Mr O'Brien's fixed remuneration, short-term and long-term incentive plans were released yesterday as the 24-year Woolworths veteran and former chief operating officer of the Australian food and petrol division spent his 10th day as the new CEO.

Mr O'Brien will be paid a fixed annual salary of $1.9 million, including base pay, superannuation and the provision of 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.

''The board determined the commencing remuneration of the incoming CEO would be lower than more experienced CEOs,'' Woolworths said in a statement issued yesterday.

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 adverse market conditions and lower net profit growth.

In 2009-10, Mr O'Brien's total remuneration was $1.66 million, which rose to $2.044 million the following year.

His short and long-term incentive plans are capped at 100 per cent of his total remuneration, with payment to be determined by corporate and financial performance measures.

But his ability to earn those incentives will be constrained by the poor trading environment for retailers.

Mr Luscombe warned when handing down his final full-year profit result last month that Woolworths' earnings would grow as little as 2 per cent this financial year due to weak trading conditions, its hardware joint venture's start-up costs and a lack of sizeable acquisitions.