Executive salaries: coming from whose pocket?

Annual reports disclose the salaries of senior executives, and the figures make the average journalist’s eyes water. While the papers boggle, we found out what the money means to the industry.
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Annual reports disclose the salaries of senior executives, and the figures make the average journalist’s eyes water. While the papers boggle, we found out what the money means to the industry.

The Age version is the cleanest, though it lacks the figures for the Fairfax masters.

Eddie McGuire scored $4.7 million last year. (Eddie’s predecessor David Gyngell was only paid a quarter of this). David Leckie at Seven had $2.2 million this year. Ten’s Executive Chairman (not the same job) Nick Falloon, walked off with $2.45 million.

By comparison, ABC chief Mark Scott earns all of $450,000 a year, barely more than the cleaners.

News Corp, secure in the knowledge that its senior executives live on the charity of Benedictine nuns and give their entire wages to orphanages in Africa, reveals that Eddie also gets a bonus at James Packer’s discretion, and was paid $250,000 to relocate. For that money his cutlery could have been carried piece by piece in a fleet of gold Rolls-Royces driven by astronauts.

Still, Eddie has a right to be annoyed. John Alexander, his boss at PBL, was paid more – $7.66 million last year up by around a third on the year before. This para from the Sydney Morning Herald just left us breathless:

“Mr Alexander, elevated to the chief executive role just over two years ago, took home $7.7 million last year. And shareholders have been asked to approve the issue of 1.3 million shares to Mr Alexander, worth more than $23 million, as part of the executive share plan. He will also receive a one-off payment of $5.3 million next June.”

The Australian annoys David Leckie by pointing out that Seven has made huge gains in ratings, and taken control of the news slots, but his pay packet is niggardly by comparison.. Over at Ten, Grant Blackley’s base salary is $800,000, but he will earn a bit more from overtime and a breakfast allowance because he starts work before 6am.

Sam Chisolm, paid $2.2 million last year, is still on the Nine payroll, though he doesn’t actually work there any more. His bank account will get its last $1.1 million top-up in October, after which we guess Sam will be free to search the employment pages for a new job. Which could still theoretically be at the top of the ABC Board.

McGuire is major beneficiary of the PBL share buying scheme. He borrowed eight million dollars to buy 500,000 shares at $16; they are now work nearly $18 each, so the deal has already made him a million dollars.

Meanwhile, Nine’s television earnings declined by $55 million, despite Eddie’s determined cost cutting and retrenchments. PBL still has a huge warchest if it wants to thrown money at Nine – $610 million in profit, a rise of 26%. But as The Australian points out, television is less important to the PBL suits these days-

” Nine now contributes about 20 per cent of PBL’s profit, compared to more than 60 per cent in 1998.”

It is much more fun buying casinos in Britain and China.

We are sure many bruised Nine loyalists are grinding their teeth as they read this, before another day looking for a job or a milk bar to buy with their retrenchment money. But we wondered just how much difference these wages would make to production levels in the industry, if the money was put on screen.

Assuming that the top six executives were paid Mark Scott’s ABC salary, the broadcasters would have an extra twenty million dollars to spend.

McLeod’s Daughters is a typical prime time top quality Australian drama, and it costs $400,000 per hour to make. So the twenty million could finance 50 hours of prime time television. Indeed, with additional presales and revenue, the broadcasters really only pay around $300,000 per episode, so the salaries could be used on 70 hours of prime time drama per year.

As policy consultant Owen Johnston point out, the Federal government has standard ways of working out the economic value of activity in an industry. The gross value added economic benefit to the economy of $20 million spent on production is considered to be $36 million, once all the economic activity created by the money is measured.

More to our point, this expenditure can be translated into jobs, using the Australian Bureau of Statistics figures for our industry.

If just those six salarie were pegged to ABC levels, the commercial television industry could create an additional 740 full time jobs.

These salary deals really do make a difference.

Glenn Dyer, in today’s Crikey, adds these remarks to his coverage of the same numbers:

“Unlike the service agreements covering the other senior PBL executives, Eddie doesn’t have any Key Performance Indicators to meet: his STI (Short Term Incentive) is “discretionary, assessed by the Executive Chairman and CEO and Managing Director of PBL”. So any incentive is solely in the hands of James Packer and John Alexander. That sounds like a case of “How high can you jump Eddie?”

So it is the height of hypocrisy that Eddie and others moan and complain about how much the likes of Mark Llewellyn and Jana Wendt were paid when they worked at Nine this year. Remember back to the Llewellyn affidavit when Eddie and his right hand man, Jeff Browne, were quoted as telling Llewellyn that he would have to eat a “st sandwich” and take a pay cut from $750,000 a year to $400,000.

And remember how Eddie’s whisperers let it be known that Jana Wendt was being paid $600,000 or $700,000 a year to front Sunday; the inference being that she was paid too much for doing not much. Now it emerges that Eddie was being paid multiples of both salaries, and more.

Footnote: In the PBL annual report for 2005, 60 Minutes Executive Producer, John Westacott was shown as earning just over a million dollars. He wasn’t mentioned this year. There are reports he is now on “half a Westie” ie on half of last year’s salary..”

(used by permission from Crikey).

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