Stephen Day and Peter Hurley, the executive directors of foundering property group Valad, surely must be the poster boys for pay-for-non-performance and if they don't get a good seeing to from stockholders at the AGM this Thursday it will come as a surprise.

Valad securities hung in there at $1 until the end of June then promptly imploded in a leverage-induced tailspin and now change hands at 8.5c.

In the face of this merciless shellacking to stockholders, the boys have been veritably showered with dollars by a remuneration committee without a majority of independent directors.

Formerly the executive chairman, Stephen Day picked up an undeserved 58% increase in base pay to $990,000 - following a 98% increase the year before - while Hurley's front-up money rose 57% to $904,000.

Those of us who don't manage other people's assets would be overjoyed with a nice trip to the Old World and an overseas allowance $514,000. This was the quantum expatriate allowance Peter Hurley received on top of his base.

But like the Demtel steak-knives ad, that's not all. There were the options under the Long Term Incentive plan for which, other than perhaps an obligation to turn up to work, there do not appear to be any hurdles.

Further, the company had noted that the options (ZEPOs which vest over two and three years) were made, "having regard to the current challenging employment and financial market conditions and is designed to act as a retention mechanism for key employees''.

Ah, a retention mechanism. Shareholders may well ask, why are we retaining these boys ... let alone paying top dollar for the pleasure?

The guaranteed bonuses for the lads were decided in March when the property sector was already getting messed up. Then, suddenly in June came the Valad earnings downgrade.

The upshot is that Valad has guaranteed at least 75% of cash bonuses for two years, which means executives have locked in large cash payments whether Valad delivers a return to unit-holders, or not. The latter is more likely.

Further, Day and Hurley are entitled to huge termination payments based on an increase in base salary for which there was no explanation.

Even forgetting about the disaster of the past couple of months since balance date, over the three years to June 20, the Valad stock price had halved whereas the ASX300 REIT index had fallen 23%. EPS rose marginally, though it is forecast to fall this year.

To audit and accounting: PWC picks up $3.33 million for audit and $4.73 for "other'' work - which is hardly conducive to an independent audit.

Valad Property Group has a thick hide. Disgrace is too soft a word for the freebies forked out to executives. You'd think we were in a bull market.

mwest@fairfax.com.au

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