Cam Wallace, former chief commerce and customer officer for Air New Zealand, has been appointed new MediaWorks CEO. Photo / Dean Purcell.
Cam Wallace, former chief commerce and customer officer for Air New Zealand, has been appointed new MediaWorks CEO. Photo / Dean Purcell.
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The Warehouse Group CEO Nick Grayston has swiftly climbed the ranks of the country's highest paid executives, taking home just over $3.3 million in the 2020 financial year, according to the company's annual report.
While his total remuneration for 2020 came to $2.86m, inlcuding a long-term incentive payment of $1.3m, he also collected $471,000 from a short-term incentive payment for the 2019 financial year that was paid out this year.
All told it's a hefty increase on last year, despite the Covid challenges.
In 2019 he was paid $1.9m, including a base salary of $1.4m.
This year's payout puts him well up the list, not far below the country's highest paid executive - Fletcher Building's Ross Taylor, who was paid $3.9m in pay and shares in 2020, down from $5.2m in 2019.
Grayston told the Herald that Warehouse executives, including himself, had forgone their short term incentive payments in the FY20 and board members had reduced their fees, in response to the disruption the company faced as a direct impact of the coronavirus pandemic.
Six people within the group earn more than $1m in FY20, this is an increase from four identified in its FY19 report.
The highest earner recorded in the group's FY19 report was $2.2m.
When asked about executive salaries, Grayston said every salary was justified and approved by the board's remuneration committee.
This comes as the owner and operator of The Warehouse, Warehouse Stationery, Noel Leeming, Torpedo7 retail chains and online venture TheMarket has been restructuring its business, with plans to lay off up to 1000 staff.
Earlier this year, just months after the company received $67.7m in wage subsidies, it announced its restructuring plans would see 750 people lose their jobs, the equivalent in 320 full time roles. In recent months many more have seen their hours slashed and the union for its workers suspect the actual number of people out of jobs is much higher than the initial 1000 number floated.
Financial statements show the group spent $44.2m on restructuring costs in the 2020 financial year. The company posted a $44.5 million bottom line profit in the 53 weeks to August 2 - although it would have made a $4.3m loss if it wasn't for the wage subsidy.
Paying it back
Now that Briscoe Group has said it will pay back the wage subsidy, will its arch rival The Warehouse Group follow suit?
Unlikely.
Yesterday Grayston told the Herald the group had not considered paying back the wage subsidy following a surge in sales following the nationwide move to alert level 3 earlier this year.
The Warehouse is unlikley to pay back its wage subsidy anytime soon
"To be clear about the wage subsidy: 100 per cent of it went to our people at the time. We did not retain it for profit.
"Those people were paid in full even though we were only obligated to pay 80 per cent – we used it as the government had intended," Grayston said.
"No we're not looking to pay it back. If the government were to retrospectively make a decision to change the rules, we'll of course work with them."
Business Insider understands any call would be made by chair Joan Withers, is on record as saying the subsidy was crucial to the Group maintaining its workforce during the lockdown period, when employees were paid their full wages.
"On average the wage subsidy equated to around 55 per cent of our normal wage and salary expense over the period to which the subsidy applied," she told RNZ.
"The Group has been through two significant restructuring processes which were in place well before Covid-19 ... These changes, although difficult for all involved, were necessary for the Group to continue to meet the needs of customers."
What's next for MediaWorks?
The owner of half of the country's commercial radio stations is said to be thinking about a new exit strategy now that MediaWorks has been slimmed down and a new CEO is in train.
US hedge fund Oaktree Capital Management has been looking to extract itself for some time and recently hived off the TV business which had been a perennial drain on the media company's finances over the past decade.
That's left the profitable radio and out-of-home businesses to come under the stewardship of former Air NZ high flyer Cam Wallace to look after. Wallace was yesterday named as the replacement CEO for Michael Anderson.
Cam Wallace, former chief commerce and customer officer for Air New Zealand, has been appointed new MediaWorks CEO. Photo / Dean Purcell.
These developments have prompted investment bankers to tout the idea of an initial public offer (IPO) or trade sale to allow Oaktree to sell down its 60 per cent stake (the other 40 per cent belongs to ASX-listed QMS Australia). An item in the Australian Financial Review's Street Talk column reckoned the Oaktree stake could be worth about A$250m.
MediaWorks has been through thick and thin since it first ended up in receivership in 1990.
Indeed, it wasn't that long ago one investment banker remarked that a dose of herpes would be more appealing than another MediaWorks sharemarket float.
The business listed on the NZX in 2004 after being bought out of receivership by Canada's CanWest, which sold a 30 per cent stake in a $104m IPO.
MediaWorks was eventually taken private in a ridiculous leveraged buyout with private equity firm Ironbridge paying $790m in 2007 just before the financial crisis.
In 2010 the company was recapitalised with another $70m poured in and various institutions taking a shareholding.
Three years later MediaWorks was again in receivership as the TV3 owner capitulated under a mountain of debt. Some big name lenders and Ironbridge got severely burnt while Oaktree ended up holding the can.
Not even Mark Weldon, it seemed, could save a business that looked destined to a tortuous death by a thousand cuts.
But now the TV arm has been sold to Disney, Oaktree could well manage an exit, albeit not without some wounds.
Whether an IPO is feasible remains to be seen. More likely QMS or another trade buyer steps up to the plate. The question, as always, is at what price.
