Retailing giant Wesfarmers has frozen the base pay of its most senior executives for two years, a move it says is in response to the global economic downturn.
The freeze means senior staff, who received a 5 per cent pay increase in October last year, will not have their base pay reassessed until October next year. On top of that, the individual component of the executives' bonuses, which accounts for up to 40 per cent of performance-based pay, has been cut.
"The decision to freeze salaries at 2008 levels for the group's most senior executive managers, as well as not pay the individual discretionary component of their annual bonuses this year, is a responsible one given the current economic climate," chief executive Richard Goyder wrote in a letter to staff.
In the last financial year Mr Goyder took home a total pay of $5.1 million, and the increase last October took his fixed salary to $3.15 million. His potential bonus for the year had been $4 million, but the cut to the individual element limits that bonus to $2.5 million, which will depend on the company's financial performance.
Mr Goyder said that Wesfarmers, which owns supermarket chain Coles, home improvements store Bunnings Warehouse and supplies outlet Officeworks, was coping adequately with an environment of slowing growth and rising unemployment.
"I want to emphasise that the group overall continues to travel relatively well given the economic conditions, with solid performances across a number of our divisions."
The staff affected are Mr Goyder, his finance director Terry Bowen, nine divisional heads and other senior employee from the company's Perth head office. The company's board of directors have also had their fees frozen.
Mr Goyder also used the letter to vent his frustration towards the Federal Government's budget decision to change the way employee share schemes are taxed for staff earning more than $60,000 a year.
"The Government's decision was unexpected. These times are challenging enough for many of our valued employees, and I am very disappointed with the Government's current position on employee share schemes."
Mr Goyder said the company had intended for 110,000 staff to have a chance to participate in an employee share scheme, but the program was on hold until there was "greater clarity" on the Government's plans.
"We will ensure we make strong representations on this issue to the Government and keep you updated on its impact."
Shares in Wesfarmers ended the day down 56 cents at $20.81.
asharp@theage.com.au
The Age
