Bosswatch News: The Great CEO Swindle

Breath-taking figures from the USA show the extent to which executives are taking a bigger and bigger slice of the corporate pie.

Massive Hike in Executive Pay

The slice of the corporate pie delivered to American executives is spiralling out of control, with the average CEO now earning a whopping 450 times the average salary of a worker. That's up tenfold from 1973, when the average CEO earned 45 times more than the average worker. After more than a decade of munificent salary-and-stock packages, many of America's corporate chieftains are departing with big retirement packages, provoking anger among some worker and shareholder activists.

"We're seeing the most obnoxious compensation packages in history" at a time when fewer workers have guaranteed retirement income, said John Hotz, deputy director of the Pension Rights Centre, a non-profit consumer organisation. In 1978, about 38 per cent of US workers were covered by defined benefits plans, which gave them a certain level of retirement income, and about 18 per cent were covered by plans that required them to invest on their own for the future, according to the Employee Benefit Research Institute. By 1997, only 21 per cent of workers had guaranteed retirement incomes and 42 per cent participated in plans that required them to invest on their own. (Source: The Washington Post)

BHP Billiton Profits Drop as War Wages

As BHP-Biliton employs radical strike-breaking tactics in a dispute that threatens the local car industry, the global giant has seen its profit forecasts cut by analysts. BHP have used professional strike-breakers, helicopters and police to break the picket of 280 maintenance workers at its Hastings plant near Melbourne.

Meanwhile, analysts say sharp rises in the Australian dollar and South African rand has led brokers, such as Merrill Lynch, to cut its forecasts for BHP Billiton's 2001/02 net profit by 10 per cent to $US1.836 billion ($A3.194 billion). As well, investment bank UBS Warburg said foreign exchange movements were likely to see the resource giant's fourth quarter profit dip below $US100 million ($A174 million). (Source: The Australian)

Lowy Under World Trade Centre Fire

Australian billionaire Frank Lowy's Westfield empire is being viewed with suspicion by New York activists who fear he wants to build a mega shopping mall on the World Trade Centre site. His opponents went public this week, voicing their concerns to two leading American newspapers and on Australian radio. Westfield struck an $800 million deal last year for a 99-year lease of the Trade Centre's shopping complex.

The collapse of the towers last September 11 did not affect that deal. The question now is what should happen to the country's most emotional piece of real estate. It is a debate that squarely pits relatives of the dead, local residents and big business against each other. (Source: The Australian)

Investors Bail On Village

Disappointed investors have bailed out of Village Roadshow after the hotel and entertainment group decided to scrap its dividend scheme on ordinary shares. Investors wiped more than $61.3 million off the market capitalisation of the Melbourne-based group, which has three core businesses including film, radio and theme parks. Village shares lost 15 per cent, or 26 cents, to $1.47 on volume of two million. Chairman Robert Kirby moved to reassure the market and said the decision would underpin long term general financial flexibility within Village Roadshow. Village executives have come under fire after paying former chairman John Kirby $2.23 million last year as the company's shares tumbled 30 per cent and net profit for the year fell 27 per cent to $55 million. (Source: The Age)

Tobacco Company Fined For Youth Smoking

US tobacco giant RJ Reynolds has been ordered to pay almost $35 million dollars in fines for illegally trying to lure young smokers through cigarette advertisements. A court in the Californian city of San Diego fined the United States' second largest tobacco company for placing cigarette ads in magazines with a high percentage of readers aged between 12 and 17. The penalty comes just a month after a Los Angeles court fined the firm $26 million dollars for illegally handing out tens of thousands of free packets of cigarettes at events attended by children. (Source: ABC)

Australian Brand For Sale

Another well-known Australian brand is up for sale, with Kraft Foods one of several companies short-listed to buy the Rosella business from global food group Unilever.. Rosella carries such brands as Continental, Chicken Tonight, Raguletto and Five Brothers. Kraft, which is owned by US-based cigarette and food giant Philip Morris, is one of the companies tipped to show interest. The sale is part of Unilever's new "global path to growth" strategy, a key element of which is to focus on a reduced number of leading brands. This would see the Rosella label sold but its modern processing plant at Tatura in regional Victoria would be kept by Unilever. (Source: SMH)

Cloud Hangs Over Indian IT

The rattle of nuclear sabres over Kashmir has worried hundreds of Australian businesses that, seeking cheaper prices, have been using Indian software developers to build their applications and process their data. The list includes some of the country's biggest corporations and many medium-sized companies - including telstra and several large banks. In aggregate, Australian companies spend billions of dollars a year with big Indian software houses such as Infosys, Mastek and HCL (Hindustan Computing Ltd). Now they are bringing their expatriate people back home and wondering whether they should be either moving or backing up their IT support because of the risk of war. Analysts say Indonesia is mounting a serious challenge to India's dominance in low-cost IT outsourcing. (Source: SMH)