Fletcher chief's pay dips in downturn

Jonathan Ling missed out on bonus payments and the chance to double his money. Photo / Greg Bowker

Harder times for Fletcher Building have hit its top boss in the pocket.

Chief executive Jonathan Ling got $1.24 million in the year to June 30 but missed out on bonus payments and the chance to double his money.

Compared with Telecom chief executive Paul Reynolds' $5 million, Ling's pay package looks paltry.

And Ling is also now running a business more highly valued on the NZX than Reynolds' business. Yesterday, Fletcher's $5.1 billion market capitalisation exceeded Telecom's $4.9 billion as a result of Fletcher trading at $8.49, close to its annual high, compared with Telecom's $2.61.

Ling's pay this year was down by $511,450 on last year's $1.76 million because of unusual factors. Fletcher slipped into the red and he failed to meet specified performance goals.

An incentive scheme operated by the business means he only gets paid extra if Fletcher meets profit targets.

In the year to June 30, the company suffered a $46 million net after-tax loss, the second loss since its 2001 NZX listing.

"His annual remuneration comprises base remuneration of $1,260,000 per annum, a short-term incentive if specified annual performance targets are satisfied of up to 100 per cent of his base remuneration, and participation in the company's long-term incentive scheme," the report said.

"His remuneration for the year was $1,245,000. As the terms of the short-term incentive scheme require the company profitability targets to be met, even if the individual performance goals are met, no short-term incentive payment arises this year."

In the long run, Ling can earn much more.

"His long-term incentives consist of the grant of 1,000,000 options which was approved by shareholders," the annual report said.

Ling's $1.7 million last year included $480,000 short-term incentives for meeting profitability targets.

His direct investment in the business almost a year ago looks to have been a cracker.

The annual report said that on November 12, he was issued with 88,599 shares as part of the executive long-term share scheme.

Fletcher was trading at around $5.50 then, only slightly above the $5.25 it slipped to in March this year.

Based on yesterday's share price of $8.49 a share, Ling's November-issued stake could be worth around $750,000.

Fletcher's investor relations manager said the board had strict criteria around setting the CEO's pay and benchmarked it against Australasian executive remuneration.

"In better times, Jonathan's package would be a lot higher. You ride out the highs and lows."

Ling has been chief executive since September 1, 2006.

In Fletcher's annual report, Ling indicates potential to expand, with Australasia his main area of focus.

He aimed to ensure all parts of the group operated profitability.

Fletcher laid off about 2500 people in the year to June 2009 and now employs 16,500 people globally.

BOARD'S HAUL
Fletcher directors' June year pay:
* Sir Rod Deane*: $363,000
* Paul Baines*: $159,560
* Hugh Fletcher: $152,500
* John Judge: $156,940
* Geoff McGrath*: $159,000
* Sir Dryden Spring: $156,000
* Kerrin Vautier: $152,500
* Ralph Waters: $159,000

*Chairman Rod Deane is retiring, replaced next April by Waters. Baines and McGrath resigned in June.

Source: Fletcher Building's annual report for the June 2009 year.

ON THE WEB
www.fletcherbuilding.co.nz for full annual report