Turning Tides?

A major industry super fund signals it will formally oppose executive option packages as a senior US official uses the anniversary of S11 to lecture against corporate greed.

Building Super Fund Votes Down Options

One of Australia's largest industry super funds has escalated the campaign against lucrative executive options packages by vowing to vote against them in the upcoming round of annual meetings. Construction and Building Industry Super (Cbus) chairman Ralph Willis said he had written to the chairmen of Australia's top 200 companies informing them of the stand. "We have $1.5 billion in Australian equities and in the context of the gathering storm on options, particularly in the US but also Australia, we believe it's appropriate to make our decision known," Mr Willis says. Cbus has taken the unprecedented step independent of other industry funds. But the Australian Council of Superannuation Investors, which represents many industry funds, has been investigating executive remuneration issues with a view to taking a more active stance on the issue. Cbus also will vote against renewing existing options packages. It will oppose any extensions or revision of the strike price, and will look closely at other bonus schemes to determine whether they are excessive. (Source: SMH)

CEOs Cop S11 Belting

Meanwhile, a senior US official has used a September 11 memorial service on Wall Street to excoriate US corporate executives for paying themselves too much, and called on business leaders to cut their own compensation. Quoting the biblical admonition to "love thy neighbour as thyself", William McDonough, president of the New York Federal Reserve Bank and a possible successor to Fed chairman Alan Greenspan, said that executive pay had ballooned beyond all reason and now threatened public support for free-market institutions. "Sadly, all too many members of the inner circle of the business elite participated in the over-expansion of executive compensation," Mr McDonough told an audience at Trinity Church near the World Trade Centre. The piling-on of stock options and bonuses, which was justified as aligning the interests of top executives with those of their stockholders, had proven woefully misguided, he said. (Source: New York Times)

HIH Board Backed $5m Payout

More revelations from the HIH Royal Commission, illustrate that point. It's been told HIH Insurance's board decided to pay around $5 million to three executive directors including founder Ray Williams at a time when policy holders claims were being delayed. The board resolved to make the payments to Mr Williams, finance director Dominic Fodera and George Sturesteps in the months before the company collapsed, at a time when claims were being delayed. The payouts related to the resignations of the executives. HIH collapsed in March 2001, $5.3 million in debt. (Source: NineMSN)

Lowy Plans Gift to Thank Australia

Australia's second richest man, Westfield Holdings Ltd co-founder Frank Lowy, is showing some altruism, although as our highest paid chief executive, it's probably not that great a sacrifice. Lowy is reportedly set to give most of his $11 million pay packet to a major initiative to help Australia in a gesture to mark his 50th anniversary of living in Australia. Lowy would not be drawn on the details of the gift, but he says his plans would be unveiled in the next six months. Mr Lowy is Australia's highest paid chief executive, last year earning $9.933 million as executive chairman of Westfield.. (Source: Nine MSN)

WMC Demerger Could Hit Employees

Concerns have been raised that miner WMC's proposed demerger could unfairly penalise employee shareholders. The business community is watching as the Senate prepares to debate the demerger legislation in the Senate this week. The proposed tax laws could save companies tens of millions of dollars by allowing them to split without crystallising profits. The new rules for corporate restructures - which will be back-dated to July 1, 2002 - are being awaited by several Australian companies which have split or are considering a demerger. But tax experts this week raised concerns the bill could unfairly penalise employee shareholders and be difficult for unlisted companies to use. (Source: AAP)

Tyco Exposes Corruption, Fraud and Theft of $309m

The Manhattan district attorney and the Securities and Exchange Commission have brought new and wide-ranging criminal and civil charges yesterday against Tyco International's former chief executive and two other former executives. Tyco also filed a lawsuit against the former chief executive, Dennis Kozlowski, citing "fraud and self-dealing" and seeking the return of income and benefits since 1997 and forfeiture of severance pay. Although the suit said the total had yet to be determined, people briefed in advance of its filing said the amount would be at least $US250 million ($455 million). The Manhattan district attorney, Robert Morgenthau, announced the indictment of Mr Kozlowski; Tyco's former chief financial officer, Mark Swartz; and the company's former general counsel, Mark Belnick. They were charged with enterprise corruption, accused of stealing more than $US170 million ($309 million) from Tyco and obtaining more than $US430 million through fraud in the sale of securities. Mr Belnick was also charged with falsifying records of company loans to himself worth more than $US14 million. (Source: New York Times)

Japan Watches Unethical Bosses Fall

Finally, in Japan executives resigning over nuclear reactor lies are the latest in a bad year, writes Shane Green in Tokyo. In a public demonstration of remorse, the top executives of Tokyo Electric Power Company (Tepco) announced their resignations and bowed deeply in contrition. With daily revelations about the company's falsifying safety reports on cracks in its nuclear reactors, the five executives last week committed the corporate equivalent of harakiri, ceremonial suicide. That there was an apparently systematic cover-up was bad enough. What made these resignations particularly painful was that they included the chairman of the company, Hiroshi Araki. In what has been a remarkable year of executives behaving badly, the food industry has been the most scandalised, badly shaking Japanese consumer confidence. The Snow Brand Food company has disappeared after a scandal over renaming Australian beef as domestic product, while Nippon Ham was also caught out last month for the same scam and its chairman and two vice-chairmen resigned. The presidents of two other food companies, Zenno Chicken Foods and Marubeni Chikusan Corp, have also resigned after it was revealed their companies had re-labelled imported chicken as domestic. (Source The Age)