RICH PICKINGS: Companies with carrots

The release of the BRW Executive Rich list offers insights on moving from being a wage slave to a wealthy executive. Here's a few pointers from the best of the best.

Workers have always used little carrots to get through the day. It might be the promise of a holiday, perhaps an upcoming birthday or maybe it’s just the weekend.

But maybe we need to add another motivation to that list – the chance to get really, really wealthy.

That’s the message from the recent released BRW Executive Rich list, which ranks 200 executives from listed companies according to the size of their shareholdings.

While the list contains the usual company founders and chief executives – Rupert Murdoch, Andrew Forrest and James Packer lead the way – it also includes more than 20 executives who are not considered to be the head of their company.

They work in a variety of roles, including company secretary, divisional manager, chief financial officer and executive director. In the main they are long-term employees who have helped the founder build the company.

So how do you move from wage slave to wealthy executive? Let’s look at some of the strategies and meet some of these employees made good.

Be there for the long haul

Building a stake in a company as an employee, or even as an executive director, takes time. A great example of this is the wealthiest woman on the list, Penelope Maclagan, group information technology director at Computershare, who has shares worth $182.7 million. Maclagan, the sister of company founder Chris Morris, joined the company way back in 1983 after working as mathematics teacher, and is credited as the architect of Computershare’s technology strategy. In an exceptionally shrewd move, Maclagan bought a lot of stock between November 2000 and March 2003, when the stock tanked from $9.88 to $1.42. It is currently around $12.70.

Pick your industry

Some industries favour share-based compensation far more than others, with the leaders being the financial services sector and the mining sector. In the financial services sector, companies such as Macquarie – the much vaunted millionaires’ factory – gives executives considerable share holdings. Michael Carapiet ($33.7 million in shares), Shermara Wikramanayake ($16.2 million), Laurence Cox ($13.4 million) and Richard Sheppard ($13.3 million worth of shares) are all Macquarie Group executives. (CEO Nicholas Moore is also on the BRW list).

In the resources sector, Andrew Forrest’s Fortescue Metals Group is becoming a millionaires’ factory in its own right. Executives on the list include Graeme Rowley ($94.8 million), commercial director Russell Scrimshaw ($39.4 million) and investment and business development director Chris Catlow ($23.2 million).

Pick your company

Picking the right industry is one thing, but picking the right company is also important. As with Macquarie, some companies award shares more readily than others. A great example is engineering firm WorleyParsons, which has ridden the resources boom in recent years to become a market darling.

The company has four executives on the list (outside of chief executive John Grill) most of whom manage various divisions, including WorleyParsons Canada boss Larry Benke ($30.1 million), Australian boss Andrew Wood ($22.1 million), M&A chief Iain Ross ($14.5 million) and Peter Meurs, managing director of the company’s economics division ($182.5 million).

Other companies that contribute multiple members include franchise brand manager Retail Food Group, conglomerate Wesfarmers and miner Mineral Resources.

Know about money

If you can’t be the chief executive, becoming chief financial officer or finance director might well be the next best thing. Finance directors on the list include Platinum Asset Management’s Malcolm Halstead (with $126.5 million worth of shares), Peter Brennan of furniture chain Fantastic Holdings ($39.5 million), Terry Brown of Wesfarmers ($9.6 million) and Christopher Wilks of Silex Systems ($21.8 million).

Know about corporate governance

The other key role for riches is that of company secretary. This group, led by resources industry-focused executive Gillian Swaby ($18.8 million) has four members, including the company secretaries of Aspen Group and Quantum Energy. From the legal fraternity, the list also includes a company counsel and a head of compliance.

Make yourself invaluable

Shares are a crucial way to tie top talent to a company, particularly in the services sector where so much of a company’s success depends on a handful of staff. Two good examples come from the funds management sector. Platinum Asset Management’s chief investment officer Andrew Clifford is considered one of the company’s key employees, and holds a stake worth $181 million. Over at K2 Asset Management Holdings, chief investment officer Mark Newman has shares worth $43.2 million. Billabong’s US manager, Paul Naude, would also appear to fit into the key-person category. His shares are worth $12.1 million.

Structure your salary package

One important thing to remember if you are hoping transform yourself from wage slave to wealthy executive is the structure of your salary package – you need to be prepared to accept equity (in the form of shares or options) rather than cold hard cash. That seems like an easy choice when your company’s share price is riding high, but being brave enough to take shares when your company is struggling is a big decision – you can’t feed your family with stock, after all.

However, as the executives above show, long-term thinking can deliver handsome rewards.

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