THE chief operating officer of News Corporation, Chase Carey, has not only taken over the duties of his predecessor, Peter Chernin, he has taken on the mantle of best-rewarded executive with a $32 million package - four times the size of his nearest competitor.
Mr Carey's $18.58 million ($US15 million) cash bonus outstripped by a factor of almost seven times the other 74 chief executives of S&P/ASX200 companies that have so far published annual reports for the year to June 30 - and none of it was "at risk".
Unlike other CEOs in the survey, Mr Carey's bonus is not benchmarked against corporate performance. The first $US10 million was "compensation" to him for voluntarily forfeiting his right to equity in his former employer, DirecTV, when he accepted Rupert Murdoch's offer to rejoin the company.
The other $US5 million was a guaranteed minimum bonus based on News's EPS performance - which meant that he would have received the money whatever happened.
As it turned out, News rebounded from a multibillion-dollar loss to a $US2.54 billion profit.
Of the 75 CEOs salaries reviewed by Weekend Business, 21 took home bonuses in excess of $1 million for 2010, and a further 15 had their take-home pay fattened by payments of more than $500,000 on top of their weekly wages. And all but one of those three-dozen chiefs finished the year with a total package of more than $1 million.
Still to have their pay packets revealed over the next few months are the major bank bosses and the Westfield shopping centre group's Lowy family - with patriarch Frank Lowy traditionally among the highest-paid executives in Australia.
Some executives, though, will have to wait a year or two before they get all that is coming to them, thanks to a growing trend to defer even short-term incentives, allowing companies the ability to claw back payments at later dates.
Suncorp-Metway's new chief Patrick Snowball, for example, received only half of the $1.93 million he was awarded, and will have to wait until 2011 for the balance - and only then if the Queensland bancassurance group sustains its performance.
The embattled phone company Telstra's $3.88 billion profit beat News Corp in the latest year, yet its chief executive David Thodey's $3.19 million package was less than a tenth of Mr Carey's. Mr Thodey has since had his remuneration increased, and could potentially earn more than $11 million this year.
Chris Lynch, the head of the toll collector Transurban, which runs much of Sydney's toll motorway network and the Lane Cove Tunnel, received the largest cash bonus of an Australian-based chief executive at $2.74 million.
Mr Lynch's total package, which includes the theoretical value of stock options, was worth more than $6 million, or equivalent to more than 10 per cent of Transurban's $59 million net profit in 2010.
The chief of Challenger Financial Services, Dominic Stevens, ranked second after Mr Carey at $7.8 million in the total salary package stakes, including a $1.1 million cash bonus.
Then again, combined cash bonuses at News Corp for Mr Carey, Rupert Murdoch, his son James Murdoch, chief financial officer David DeVoe and Fox News chief Roger Ailes topped $US33 million - which is more than the entire 2010 profits of several companies in the survey.
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Frequently Asked Questions about this Article…
How much did News Corporation COO Chase Carey receive in total pay and cash bonus?
Chase Carey received a reported $32 million total package, including an $18.58 million cash bonus (reported as US$15 million). The package was described as about four times the size of his nearest competitor.
Was Chase Carey’s $18.58 million cash bonus tied to News Corporation’s performance?
No. Part of Carey's cash was paid as compensation (about US$10 million for forfeiting equity at DirecTV) and another US$5 million was a guaranteed minimum bonus tied to News’s EPS outcome — in other words, it was not at risk. The article notes News rebounded from a loss to a US$2.54 billion profit that year.
How unusual is a bonus the size of Carey’s among S&P/ASX200 executives?
Very unusual. The article says Carey's cash bonus outstripped the other 74 S&P/ASX200 chief executives who had published annual reports by a factor of almost seven. Of 75 CEOs reviewed, 21 received bonuses over $1 million and a further 15 received bonuses over $500,000.
Which Australian-based CEOs had large cash bonuses or total packages in the survey?
The article highlights Transurban’s Chris Lynch, who received the largest cash bonus among Australian-based CEOs at $2.74 million and a total package worth more than $6 million. Challenger Financial Services chief Dominic Stevens had a $7.8 million total package (including a $1.1 million cash bonus). Telstra’s David Thodey had a $3.19 million package in the period reported.
What trend in executive pay does the article say investors should watch for?
The article describes a growing trend to defer even short-term incentives, which allows companies to claw back payments later if conditions change. This means some executives receive only part of awarded incentives immediately and must meet future performance conditions to get the rest.
Can you give an example of deferred pay or performance conditions from the article?
Yes. Suncorp-Metway’s new chief Patrick Snowball was awarded $1.93 million but received only half up front. The balance will be paid in 2011 only if the bancassurance group sustains its performance, illustrating deferred pay tied to future outcomes.
How do News Corporation’s combined executive bonuses compare with other companies’ profits?
Combined cash bonuses at News Corporation for Chase Carey, Rupert Murdoch, James Murdoch, CFO David DeVoe and Fox News chief Roger Ailes topped US$33 million — an amount the article says was greater than the entire 2010 profits of several companies included in the survey.
What should everyday investors look for in company remuneration reports about CEO pay?
Everyday investors should check whether bonuses are performance‑based or guaranteed, the size of one‑off compensation (for example, payments for forfeited equity), any deferred incentive arrangements or clawback provisions, and how executive pay compares with company profits. These details can help assess alignment between executive rewards and shareholder interests.
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